The EURAUD cross has been consolidating after the steep sell-off and was trading at 0.20 per cent higher on Wednesday, with the price hovering at around 1.5670 during the London session.
The major support of previous lows in the 1.5580 – 1.5620 area was tested yesterday, but bears failed to push the price below this zone and a somewhat indecisive candle formed on the daily chart, which could suggest that the bearish strength is waning slowly. As long as the Euro remains above this support, the very short outlook seems bullish.
However, if this support zone falls, the medium-term bearish trend could be confirmed with the next target probably being near 1.55, or a bit lower.
On the upside, the intraday resistance could be slightly below the 1.57 level, where Friday’s and Monday’s highs are located. If this level is broken to the upside, further relief rally toward 1.5750 may occur. The major resistance is at the 200-day moving average, which is around 1.5850. The single currency needs to push above this resistance to cancel the medium-term downward momentum and the next level to consider might be at the 100-day moving average near 1.5950.
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