EURAUD looks tired from its downtrend, as the pair has formed an inverted head and shoulders pattern on its 4-hour time frame and is currently testing the neckline around the 1.6300 handle.

A break above this resistance could set off a rally that’s the same height as the chart formation, which spans roughly 300 pips. However, the 100 SMA is still below the 200 SMA to suggest that the path of least resistance is to the downside or that there’s a good chance resistance could hold. The 200 SMA even lines up with the neckline to add to its strength as a ceiling.

Stochastic is on the move up to reflect the presence of bullish momentum, but the oscillator is closing in on the overbought region to indicate exhaustion among buyers soon. Turning lower would confirm that sellers are back in the game.

RSI also has some room to climb before reaching the overbought area, but the oscillator seems to be topping out and ready to head south. A continuation of the drop could take EURAUD back down to the lows near the 1.6000 mark or lower.

EURAUD could take cues from Australia’s jobs report, which is slated to show a slower pace of hiring in September compared to that of August. Still the unemployment rate is projected to hold steady at 4.2%, possibly supporting the RBA’s view that the labor market remains tight. An increase in joblessness, however, could bring downside for AUD.

Later in the week, the ECB decision could also impact EURAUD trends, as the central bank is widely expected to cut rates but refrain from committing to future easing moves. A less dovish than expected announcement could bring upside for the shared currency, especially since the 0.25% rate cut has been priced in for some time.