EURAUD previously broke past the resistance at 1.5600 then zoomed up to a high of 1.5696 before retreating.

This could be a correction from the uptrend if the pair finds support at the Fib levels. 

The 50% retracement level already seems to be holding as support as it lines up with the 200 SMA dynamic inflection point. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, which means that the uptrend is more likely to resume than to reverse. 

In that case, price could make its way back up to the swing high or higher while stochastic makes its way out of the oversold area to reflect a return in bullish momentum. 

Euro zone reports have been mostly stronger than expected last week but this week’s set has failed to impress so far. The German GfK consumer climate index held steady at 10.7 instead of improving to the 10.8 consensus. German import prices, however, ticked up by 0.6% versus the projected 0.4% gain. 

Traders might be paring risk ahead of the flash CPI releases later in the week as this could have a significant impact on ECB rate hike expectations. Today has the German preliminary CPI and French preliminary GDP, along with the Spanish flash CPI.

As for the Aussie, the major reports aren’t due until Thursday. These are the private capital expenditure, private sector credit, and building approvals figures. Chinese official PMI readings are also due that day. 

By Kate Curtis from Trader’s Way