EUR/AUD resumed its bearish bias after tentatively respecting 1.4318, which is the 61.8% Fibonacci retracement level of the end of January rally. Price is currently trading below all three key SMAs and if downward momentum continues, we could see price target the 1.40 support area that was first established earlier this year.
Last night, the Reserve Bank Australia surprised the economists by holding rates steady and avoided consecutive rate cuts, but signaled that future rate cuts are still on the table for the upcoming decisions. If we do see a miss with Australian GDP on Tuesday night, we could very well see price drop a full figure on the initial reaction.
Price action on the EUR/AUD daily chart shows that the bearish move may not be over yet, we could see deeper support from 1.3712, which is the 127.2% Fibonacci expansion level. Critical resistance will come from the zone that includes both the 200- and 50-day SMA.
The trade: Sell EUR/AUD 1.4290, with a stop loss at 1.4390 and take profit at 1.4210. The risk/reward ratio is around 1:3
Edward J. Moya
Senior Market Strategist
WorldWideMarkets Online Trading