Bullish EURAUD toward Channel Resistance
Bias: Bullish EURAUD toward Channel Resistance
Point to Establish Long Exposure: At Market
Target 1: 1.5275 July High
Target 2: Channel Top ~1.55
Invalidation Level: Today’s Low (Turned on CNY Devaluation News)
Two moves are happening simultaneously that is providing a bid for EURAUD. First, EUR has maintained a pretty steady bid as the market seems to lose preference to sell EUR toward new lows. A break of 1.0818/09 would need to develop on EURUSD before that becomes a theme again and we’re pushing further away from that level (spot: 1.1063). Additionally, the Peoples Bank of China devalued their currency to remain competitive for exports causing the USDCNH to see its largest 1-day gain in history. This move saw Asian currencies aggressively decline as signs of deflationary pressures continue.
Additionally, from an economic surprise point of view, Europe is on an upswing as Asian economies are showing a string of misses on tier 1 type economic data prints. If this trend continues, continual easing could continue adding further pressure on AUD and other related currencies.
EURAUD -- Medium-term Channel & Weekly Pivot Support at 1.4850 is likely to hold as pair continues advance.
2nd resistance: 1.5331 Dec 17th high
1st resistance: 1.5276 July 28 high
1st support: 1.4824 August 11th low, Pre-CNH Devaluation
2nd support: 1.4727 August 5th low, Recent Channel Bounce
EURAUD - The ratio of long to short positions in the AUDUSD stands at -3.755 as a majority of traders are short. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that EURAUD may continue higher.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.