Ascending Channel and Dynamic Support Present New Entry Windows for Buyers

Forex

Economic

Summary:

This neutral reading is accompanied by a divergence relative to price action; during the previous touch of the channel line, the price was lower while the RSI held a higher level

BUY EURAUD

EXP

TRADING

1.65000

Entry Price

1.66500

1.64300

1.64897 -0.00242 -0.15%

0.0

Pips

Flat

1.64300

Exit Price

1.65000

Entry Price

1.66500

Australia's trade balance shifted into a deficit of AUD 3,018 million month-on-month in May, following a surplus of AUD 1,383 million in the previous reading (which was revised down from AUD 1,791 million), according to the latest foreign trade data released by the Australian Bureau of Statistics on Thursday. This result fell significantly short of market consensus, which had anticipated a surplus of AUD 2,200 million. Further details reveal that Australian exports dropped by 6.9% month-on-month in May, reversing the 7.2% increase seen a month earlier. Meanwhile, imports rose by 2.6% month-on-month in May, compared to a 0.2% increase observed in April (revised from 0.8%). Additionally, the RBA's June policy meeting minutes showed that policymakers remain concerned about rising inflationary pressures and downside risks to growth stemming from Middle East conflicts, asserting that the central bank will not hesitate to raise interest rates to guarantee price stability.

On the other side of the pair, the Euro found some backing in comments made by European Central Bank President Christine Lagarde during the ECB Forum in Sintra. The official stated that risks to the economy are currently more balanced than they were a few weeks ago and rejected the idea that the Eurozone is facing a stagflation scenario. Likewise, she reiterated that the institution stands ready to act if necessary to ensure that inflation converges sustainably toward its target.

However, the latest consumer price figures reinforced the perception that inflationary pressures continue to moderate across the bloc, reducing the urgency for further monetary adjustments by the ECB. Preliminary data showed that the Eurozone Harmonized Index of Consumer Prices (HICP) slowed to 2.8% year-on-year in June, down from the 3.2% recorded in May and coming in below the market expectation of 3.0%. On a monthly basis, the indicator pulled back by 0.1%, following the 0.1% advance observed the previous month.

Moderation was also evident in core inflation, a measure closely watched by the ECB as it excludes more volatile components such as food and energy. Core HICP advanced 2.4% year-on-year, down from the previously recorded 2.6% and below consensus forecasts. In the monthly comparison, the indicator increased by 0.2%, slowing down from the 0.3% observed in May. The decline in headline inflation was mainly driven by the drop in energy prices, while the reduction in core inflation suggests that domestic price pressures are also beginning to lose momentum. This scenario has led markets to moderate expectations of further rate hikes by the ECB, limiting the single currency's upside potential. Ascending Channel and Dynamic Support Present New Entry Windows for Buyers_1

Ascending Channel and Dynamic Support Present New Entry Windows for Buyers_1

Technical Analysis

EURAUD is currently trading within an ascending channel and has recently retraced toward support at the 1.6500 level. This area sits very close to the channel's midline, where the price could find a renewed bullish reaction. If this line holds as support, we could see another upward impulse targeting the upper boundary of the channel around 1.6650. Meanwhile, the 100 and 200-period moving averages are closely tracking the channel boundaries, validating the validity of this technical pattern. These averages currently sit at 1.6354 and 1.6302, respectively, providing solid dynamic support upon any deeper approach.

Looking at the oscillators, the RSI is hovering at the 50 level, positioning itself directly in neutral territory. However, this neutral reading is accompanied by a divergence relative to price action; during the previous touch of the channel line, the price was lower while the RSI held a higher level, suggesting that bearish pressure is fading quickly and bulls could soon regain control. Concurrently, the MACD shows a bearish histogram that is rapidly losing depth, with the signal lines remaining in positive territory. This technical setup indicates that an upward move represents the path of least resistance.

Trading Recommendations

Trading direction: Buy

Entry price: 1.6500

Target price: 1.6650

Stop loss: 1.6430

Validity: Jul 10, 2026 15:00:00

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Ascending Channel and Dynamic Support Present New Entry Windows for Buyers

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