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EUR/AUD Trend Line Test (July 1, 2014)
The downtrend of EUR/AUD is still intact, as the pair is trading below a falling trend line on its 4-hour time frame. However, the upcoming events this week could be crucial in determining whether this trend will carry on or not.
Price is testing the 38.2% Fibonacci retracement level, which is around the 1.4550 minor psychological handle. Stochastic is already in the overbought zone, indicating that sellers could jump in sooner or later.
The RBA will announce its interest rate decision today and possibly determine the longer-term direction of the AUD. Hawkish remarks could lead to an Aussie rally while downbeat cautious comments might lead to a selloff. Later on, the ECB will announce its policy decision but no changes are expected for now.
Selling at 1.4550 with a stop above the 1.4600 mark and a target of new lows could yield a good return on risk if the economic events turn out in favor of a selloff.
By Kate Curtis from Trader's Way
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