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We’ve got mixed data from China earlier today, but it looks like this bullish AUD setup might still play out.

Will the trend line on EUR/AUD keep buyers away?

Before we talk setups, lemme show you the major headlines in the previous trading sessions:

Upcoming Potential Catalysts on the Economic Calendar:

  • Canadian housing starts and manufacturing sales at 12:30 pm GMT
  • Empire State manufacturing index at 12:30 pm GMT
  • U.K. CB leading index at 1:30 pm GMT

What to Watch: EUR/AUD

EUR/AUD 1-hour Forex Chart
EUR/AUD 1-hour Forex Chart

EUR/AUD is cruising below a falling trend line on its short-term chart and looks ready to test resistance again.

This pair is already hovering at the area of interest or the former support at the 1.5425 region, which happens to line up with the 100 SMA dynamic inflection point. This moving average is below the slower-moving 200 SMA to confirm that the selloff is likely to resume.

Is EUR/AUD overbought?

Stochastic still seems to have some space to head higher before indicating exhaustion among buyers and turning lower. Once that happens, bears could take over and bring EUR/AUD back to the lows around the 1.5350 minor psychological mark or lower.

Mostly upbeat data from China could be enough to support the Aussie since the Land Down Under is its trade BFF. To top it off, risk-taking might stay in play thanks to increased stimulus efforts.

Meanwhile, the euro could stay under downside pressure as vaccination programs are hitting plenty of roadblocks in the region. At the same time, countries like Italy are once again imposing lockdown restrictions to curb the spread of new variants of the virus.