EURAUD is still trading sideways on its 4-hour time frame, as price is testing the resistance at the 1.5650 minor psychological mark. If this keeps holding, the pair could fall back to support at the 1.5300 handle.

The 100 SMA is above the 200 SMA, though, so the path of least resistance is to the upside. In other words, there’s a chance that the resistance might break and set off a climb that’s the same height as the range or 350 pips.

Stochastic is also starting to pull higher from the oversold region, indicating that buyers might take over while sellers take a break. RSI is on the move down but appears to be changing its direction halfway through, suggesting that buyers are regaining control.

A larger dip could still take EURAUD back to the area of interest around the middle of its range, which happens to line up with the dynamic support at the moving averages around 1.5500.

This week, Australia printed weaker than expected GDP while the RBA hiked rates by 0.25% as expected, hinting that the central bank might pause from tightening soon.

Earlier today, China reported a slowdown in inflationary pressures, as the headline CPI dipped from 2.1% to 1.6% while the PPI showed a 1.3% decline. This could be enough reason for the PBOC to pause from its tightening efforts, probably allowing business and consumer activity to recover.

In addition, reports that China is slowly easing COVID restrictions are keeping traders hopeful that the country is moving closer to reopening soon. This would translate to even stronger economic activity, likely lifting demand for Australia’s raw material commodities.

Meanwhile, the eurozone economy continues to struggle under the weight of rising energy costs and higher interest rates. Worsening tensions with Russia could also complicate the situation, which might mean more uncertainty for the region.