EUR/AUD Headed Back to 1.5850 Range Resistance

EURAUD is moving sideways on its 4-hour chart, finding support at the 1.5600 major psychological level and resistance at the 1.5850 minor psychological mark. Price just bounced off the bottom of the range and looks due to test the ceiling.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the ceiling is more likely to hold than to break. Price is also finding some resistance at the dynamic inflection points at the moving averages.

Stochastic is heading higher from the oversold region, though, suggesting that buyers are taking over while sellers take a break. The oscillator has plenty of room to climb before reaching the overbought zone, so price could follow suit.

Similarly RSI is heading higher to show that buyers are in control, and the oscillator has room to head north before indicating overbought conditions or exhaustion among buyers.

If the range resistance holds, EURAUD could make its way back down to support. On the other hand, a break above the ceiling could set off a climb that’s the same height as the rectangle pattern. Similarly a break below support could be followed by a drop of the same size.

Australia printed stronger than expected jobs figures for December, confirming positive jobs momentum that started in November. However, the higher-yielding currency’s gains were limited as risk-off flows returned to the markets in the later trading sessions.

As it turns out, some economic figures suggested that the Omicron variant may have had bigger repercussions than expected, casting doubts on the Fed’s tightening timeline. Prematurely hiking interest rates in order to curb inflation might undo the recovery since the start of the pandemic, possibly bringing more downside for commodities and commodity currencies.

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