EURAUD recently fell below the key support area around the 1.6200 major psychological level and dipped to a low of 1.6035. Price is pulling up to the broken support, which might hold as resistance.

Applying the Fibonacci retracement tool shows that this lines up with the 38.2% Fib level, adding to its strength as a ceiling. A larger correction could last until the 50% level that lines up with the 100 SMA dynamic inflection point around 1.6230 or the 61.8% Fib that coincides with the 200 SMA.

On the subject of moving averages, the 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is likely to resume. Then again, the gap between the indicators has narrowed to suggest weakening selling pressure.

Stochastic has room to climb before reflecting overbought conditions or exhaustion among buyers, so a larger correction could be underway. RSI is just turning higher from the oversold region, so buyers still have the upper hand for now.

The Australian economy is due to release its jobs report later this week and a slower increase in hiring of 40.9K is eyed. This is much lower compared to the previous 178.8K gain but still enough to keep the jobless rate steady at 7.0%.

Meanwhile, the euro is awaiting the release of December PMI readings, which are strong leading indicators. Small declines in German business activity are eyed while France could report improvements. Still, the region’s aggregate readings for the manufacturing and services sectors could post dips. Stronger than expected results could allow the shared currency to stay afloat while weak data could allow the EURAUD drop to resume early.

Apart from that, overall market sentiment might be in favor of the higher-yielding AUD if traders focus on vaccine distribution updates and stimulus expectations.