EURAUD could be in for a reversal from its uptrend, as the pair formed a double top on its hourly time frame. Price hit resistance around the 1.6300 levels and is now down to the neckline at 1.6200.

A break below this support zone could set off a drop that’s at least the same height as the chart pattern or a hundred pips. The 100 SMA is crossing below the 200 SMA to indicate that the path of least resistance is to the downside or that bearish momentum is picking up, especially as price closes below the moving averages as well.

Stochastic is already dipping in the oversold region to reflect slowing bearish pressure, although the oscillator has yet to pull higher to suggest that buyers are taking over. RSI, on the other hand, already looks ready to move north so price could follow suit.

If support around the 1.6200 major psychological level holds, EURAUD could make another test of the resistance at 1.6300 next.

EURAUD was dragged lower by stronger than expected Australian jobs data, which underscored the RBA’s view that the labor market remains tight and that monetary policy should stay restrictive for some time.

The pair could then take cues from the upcoming ECB decision, which is widely expected to come with a 0.25% rate cut. ECB head Lagarde’s presser could also influence the euro’s reaction to the announcement, as refraining from committing to future rate cuts could still allow the shared currency to bounce on profit-taking.

A dovish tone suggesting more easing is in the cards, on the other hand, could mean more downside for the euro as this would put the ECB in contrast with the RBA’s relatively hawkish stance. Overall risk sentiment is still a factor in AUD behavior, though, as the currency has been on weak footing earlier in the week due to disappointment over Chinese stimulus announcements.