EUR/AUD Outlook: RSI Reverses Ahead of Oversold Zone

EUR/AUD carves a series of higher highs and lows after registering a fresh monthly low (0.5849) last week, and the exchange rate may stage a larger rebound as the Relative Strength Index (RSI) reverses ahead of oversold territory.

EUR/AUD Rate Outlook

EUR/AUD attempts to retrace the decline from the start of the month after failing to push below the 1.5800 (38.2% Fibonacci extension) to 1.5840 (61.8% Fibonacci retracement) area, with a close above the 1.6100 (50% Fibonacci extension) to 1.6140 (61.8% Fibonacci extension) region bringing the 1.6200 (38.2% Fibonacci retracement) handle on the radar.

A move above the 50-Day SMA (1.6293) opens up 1.6300 (61.8% Fibonacci extension), but the exchange rate may develop a downward trend as the moving average starts to reflect a negative slope.

Failure to close above the 1.6100 (50% Fibonacci extension) to 1.6140 (61.8% Fibonacci extension) region may push EUR/AUD back towards the 1.5970 (50% Fibonacci extension) to 1.6020 (50% Fibonacci retracement) zone, with a break/close below the 1.5900 (38.2% Fibonacci extension) handle bringing the 1.5800 (38.2% Fibonacci extension) to 1.5840 (61.8% Fibonacci retracement) area back on the radar.

--- Written by David Song, Strategist