Search ForexCrunch

The Euro is trading lower against the Australian dollar post a series of verbal intervention from the ECB officials. On last Saturday, ECB’s Mario Draghi comments pushed the Euro lower, and yesterday ECB’s Noyer in a speech mentioned that the ECB stands ready to act, and they can buy private or sovereign assets, depending on inflation and incoming data. EURAUD dived towards the 1.4650 support area, as EURAUD sellers saw that as an opportunity to take the pair lower.

ECB’s Noyer also emphasized on the fact that the appreciation in euro over past 12 months is not accurate, and it might correct naturally. On the other hand, the Australian dollar has performed well against almost all major counterparts.

Technical Analysis

EURAUD buyers have managed to hold the downside below a key support at 1.4650. There are two critical trend lines forming along with a minor RSI divergence on the 4 hour timeframe. Overall, short-term market sentiment is bullish, as there is a possibility of a double bottom at 1.4650. Daily RSI is looming around the extreme levels, which means a pullback might be on the cards. However, the confluence area of trend lines and 50 simple moving average could act as a crucial barrier for the pair.
On the downside, a break and close below 1.4650 might turn the bias in the favor of sellers, as the weekly market sentiment is still bearish.

RBA Meeting Minutes

RBA meeting minutes were published during late Asian session, which again contained stronger talk against the Australian dollar. The minutes stated that “the Australian dollar had appreciated, partly in response to domestic economic data, and it was now close to the level in November 2013, although on a trade-weighted basis the exchange rate was still about 12 percent below its peak a year earlier”. EURAUD was seen trading higher after the release.

EURAUD breakdown largely depends on the key resistance zone at 1.4880. If sellers fail to defend the mentioned level, then the pair might gain momentum towards the 200-day simple moving average.

Note: Chart is attached as Post Image.