EURAUD has formed higher lows and higher highs inside a rising channel on its 4-hour time frame. Price is bouncing off support and could be due for a move to the top or the upside targets marked by the Fibonacci extension tool.

In particular, the 38.2% extension level lines up with the swing high around 1.6235 while the 50% extension is closer to the channel resistance. Stronger bullish momentum could take EURAUD up to the 61.8% level at 1.6317 or the 78.6% extension at 1.6376. The full extension is near the 1.6450 minor psychological mark.

The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. The 100 SMA is holding as dynamic support at the bottom of the ascending channel and is increasing its gap with the 200 SMA to signal an accelerating uptrend.

RSI is turning higher without reaching the oversold region, indicating that bullish pressure is returning early. Stochastic is also pulling up from the oversold region to show that buyers are returning while sellers take a break.

The Aussie is on slightly stronger footing to start the week as trade tensions appear to be easing while talks resume. Still, there is the looming uncertainty that both the US and China might wind up slapping another round of tariffs at each others’ products in June.

Meanwhile, the euro has the flash PMI readings to look forward to this week and small improvements are eyed. If so, this could lift the burden on the ECB to ease monetary policy soon and allow the euro to take part in the risk-off rallies. On the other hand, downside surprises could drag the shared currency further south as an extended slowdown would fuel rate cut hopes.