EUR/AUD traded higher during the European morning Friday after it hit support near 1.5700, the lower end of the sideways range that’s been containing the price action since the 25th of June. Bearing in mind that the rate continues to trade within that range, we would consider the short-term outlook to be neutral for now.
That said, given that the latest rebound came from near the lower bound of the range, we would expect the pair to continue trading higher for a while yet, perhaps for a test near the 1.5810 barrier. If that level fails to prevent the rate from rising further, then we may see extensions towards 1.5870 or the upper bound of the aforementioned range, at 1.5885.
We would like to see a clear and decisive break above 1.5885 before we start examining whether the outlook has turned back to positive. Such a break would confirm a higher high on both the 4-hour and daily charts and is possible to pave the way towards the 1.5965 zone, defined by the peak of the 9th of May.
Taking a look at our short-term oscillators, we see that the RSI, although below 50, has turned up. It could move back above 50 soon. The MACD lies below both its zero and trigger lines but shows signs of bottoming as well. These indicators corroborate our view that the pair could continue drifting higher, at least within the range.
On the downside, a clear break below 1.5700 could signal the downside exit off the sideways range and could initially aim for our next support of 1.5650. Another dip below that level could carry more bearish implications and could open the path towards the 1.5600 zone.
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