The euro has bounced against the Aussie dollar on Thursday, as traders continue to play the same range.
EUR/AUD
The euro has bounced slightly against the Australian dollar during the trading session on Thursday, as we got fairly close to the bottom of the range that we have been in for several months. The stochastic oscillator is starting to cross for a bullish crossover, but it is not in an overall oversold condition, so it's not quite a signal, but it does show you that we chop along in this area.
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We had fallen pretty precipitously to get down here, and when you look at longer-term charts, the 1.60 level is a major support level. If we drop down to that level, it should have plenty of buyers willing to take advantage of it. That being said, if we were to give up 1.60, this pair is cooked. To the upside, we have the 1.66 level as resistance, offering a bit of a barrier. The 200-day EMA heads in that direction as we speak, so that could give you a little bit of resistance as well.
Central Bank Stasis and Range Boundaries
The Australian dollar is backed up by a central bank that may have to raise rates, but it also has the advantage of not being Europe. And what I mean by that is that they are not waiting around to see whether or not there is going to be enough energy for the industrial base. The heavy commodity sector will help in this environment if we get inflation. We'll just have to wait and see.
But as things stand right now, this is a market that continues to see quite a bit of support just below, but also we see a lot of resistance above, as we are essentially in a 600-pip range from the longer-term perspective and a 400-pip range from a shorter-term perspective during the year. We are basically in the middle of all of that, so sideways makes sense, but this is a market that's trying to sort out what the next move is by these central banks, as they both are somewhat caught in stasis. I prefer to trade the range and watch the stochastic oscillator for setups.
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