EURAUD formed higher lows connected by a rising trend line visible on the daily time frame. Price is in for another test of this support zone soon.

The 100 SMA just crossed above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. This bullish trend line is also in line with the 1.6000 major psychological mark.

A break below this level, on the other hand, could be an early indicator of a reversal about to happen. Still, a decline might find some support at the dynamic inflection points at the moving average around the 1.5800 major psychological mark.

Stochastic has some room to head lower, though, so price could follow suit while sellers are in control. Once the oscillator reaches the oversold area to signal exhaustion among bears and turns higher, buyers cold return and push EURAUD back up to the swing high at 1.6400.

Earlier today, Australia reported weaker than expected retail sales data, as consumer spending fell by 2.7% in July versus the estimated 1.9% decline. Lockdown measures in several states likely dragged the overall figure lower and could continue to keep a lid on spending in the coming months.

Data from China also turned out weaker than expected, with the Caixin services PMI falling short of estimates and sliding from 54.9 to 46.7. This signals industry contraction versus the projected dip to 52.0, which would merely reflect slower growth. In turn, this might weigh on demand for commodities from Australia, especially since the manufacturing survey also printed weak results.

Up ahead, the NFP release might impact overall market sentiment, including demand for higher-yielding currencies like the Aussie. Strong results could revive Fed tightening hopes, which might be bearish for commodities and riskier assets, while downbeat data could boost the Australian dollar.