EURAUD is trading below a descending trend line connecting the highs since the start of the month. Price looks ready for another test of the resistance, which happens to line up with other inflection points.

The trend line coincides with the 61.8% Fibonacci retracement level that’s near the 1.4600 major psychological mark and a former support region. Price is currently testing the 50% level that lines up with the 200 SMA dynamic inflection point.

On the subject of moving averages, the 100 SMA is below the 200 SMA to suggest that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse. If any of the Fibs hold as resistance, EURAUD could fall back down to the swing low near the 1.4300 mark or lower.

Stochastic has been indicating overbought conditions for a while and looks ready to move back down. Similarly RSI is in the overbought area and might move south, so EURAUD could follow suit while bearish pressure picks up.

The eurozone flash CPI readings are up for release around the middle of the week and a slight pickup in inflation is eyed. The headline figure could tick up from 8.9% to 9.0% while the core version of the report might climb from 4.0% to 4.1% for August.

Prior to this, Germany will be releasing its preliminary CPI as well, but the region’s top economy might see a dip from 0.9% to 0.2% for August. Weaker than expected results could lead traders to price in expectations of a downside surprise for the region’s CPI.

As for the Aussie, the main event risk is the release of China’s Caixin PMI readings later in the week. Another dip is eyed for the manufacturing PMI, which might drop from 50.4 to 50.1 in August, so this could bring risk-off flows back in the market.