EURAUD has been trading in a pretty tight short-term range as fundamental factors battle it out. Price has found support near the 1.5700 handle and resistance around 1.5875.

The pair is currently testing support and might be due for another bounce to the top. The 100 SMA is above the longer-term 200 SMA to suggest that the path of least resistance is to the upside, but the moving averages might not be so reliable since the indicators are oscillating.

RSI is on the move up to show that there is some bullish pressure left. This could be enough to keep losses in check and allow buyers to stay in control. Stochastic also has some room to climb before indicating overbought conditions, so there may be some bullish pressure left until a test of the range top.

A breakout in either direction could lead to a move of the same height as the chart pattern. In other words, a move past the 1.5875 level could spur a rally of around 175 pips and a break below the 1.5700 mark could lead to a drop of that size.

No actual monetary policy changes are expected from the ECB in their upcoming monetary policy statement but traders are still hoping to get more clues on when the central bank might start hiking. Their earlier announcement was seen as less hawkish than expected as policymakers simply announced a taper of their QE instead of ending it completely in September.

Moreover, Draghi didn’t give any clear hints on when tightening could start, so euro bulls were understandably disappointed. Still, the shared currency is able to draw support from the Trump-Juncker agreement to hold off further tariffs while trade negotiations are going on.

As for the Aussie, risk sentiment has been the main price driver over the past days and the changing market mood has also had it pacing back and forth.