EURAUD Range Support (Sep 06, 2016)

Price bounced off the top of the range and seems to have its sights set on the bottom once more.  

The 100 SMA is above the 200 SMA on the 4-hour time frame, indicating that the path of least resistance is to the upside. Also, the gap between the moving averages is widening so bullish pressure could build up.  

Meanwhile, stochastic is already indicating oversold conditions, which suggests that sellers are already exhausted. Once the oscillator moves out of the oversold region, buyers could regain control of price action, but the pair might have to test the range support first. 

There are plenty of event risks for the Australian dollar this week, among which is the RBA interest rate statement. No actual policy changes are expected as the central bank might keep rates unchanged at 1.50% but traders are likely to pay close attention to the tone of the statement. 

Data from Australia has been mostly weaker than expected, particularly on the business and consumer spending fronts. However, the RBA has been less inclined to cut interest rates since they already did so back in August and are wary of possible repercussions on the housing market. 

Later on in the week, Australia will release its quarterly GDP and trade balance. A weaker growth figure of 0.4% is eyed, compared to the earlier quarter's 1.1% expansion. Meanwhile, the trade deficit is expected to narrow to 2.65 billion AUD probably on stronger export activity. China's trade balance is also up for release. 

As for the euro, the ECB statement is lined up for Thursday but no actual policy changes are expected. Still, any dovish remarks could keep the door open for additional stimulus, especially if Draghi highlights the downbeat flash CPI figures. 

By Kate Curtis from Trader's Way