Forex Watchlist: Can EUR/AUD Extend Its Uptrend?

EUR/AUD has pulled back to 1.4900 after hitting highs near 1.5300 in May.

Can the pair make new Q2 2022 highs in the next few days?

Here’s the chart that I’m looking at today:

EUR/AUD 4-hour Forex Chart

EUR/AUD has been making higher highs and higher lows since April when the pair found support at the 1.4350 psychological handle.

EUR is now on a “higher low” against AUD as it consolidates in a possible Inverse Head and Shoulders pattern around the bottom of EUR/AUD’s ascending channel near 1.4800.

Can EUR extend its uptrend against AUD?

Techincals are a bit iffy on the 4-hour time frame with Stochastic approaching the overbought region while the 100 SMA narrows its gap with the 200 SMA.

Maybe this week’s events might help traders find EUR/AUD’s next direction.

The Reserve Bank of Australia (RBA) is widely expected to raise its interest rates today and, while the move is mostly priced in, a bigger-than-expected rate hike or hints of further tightening might bring more bulls to AUD’s yard.

A hawkish RBA event could drag EUR/AUD back down to the 1.4800 June lows. It might pull EUR/AUD below its channel support!

There’s the European Central Bank (ECB) event to consider though.

Word around is that we’ll get a confirmation of a July rate hike. If EUR bulls are lucky, we’ll hear hints of multiple rate hikes or a hawkish rate hike schedule from ECB President Lagarde and her team.

If traders choose to focus on ECB’s hawkishness, then EUR/AUD could jump from its current levels and extend its 4-hour uptrend above the 100 and 200 SMAs.

What do you think?

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