The EURAUD pair advanced on Friday, posting a 0.5% gain during the EU session as the Australian dollar declined, while the EURUSD pair was trying to consolidate above 1.12.
The current resistance is at the 200-day moving average, located just above 1.57, where the price has already failed in November. Should the euro jump above that level, stop losses of short positions will likely be triggered, potentially sending the cross toward 1.59, where August and September lows are.
Alternatively, if bears defend the 200day average, we could see a renewal in the bearish pressure, targeting the 1.55 threshold. The support of cycle lows is below 1.54, and if the euro drops below it, the medium-term downtrend would likely be confirmed.
It looks like the daily chart was oversold, resulting in a possible squeeze rally. First, however, bulls must push the single currency above the mentioned resistance to stage a reversal.
Earlier today, the ECB meeting accounts from the central bank’s last meeting were released. The view was that judging based on the current developments, net purchases under the Pandemic Emergency Purchase Programme could be expected to end by March 2022, according to Reuters.
Moreover, it was seen as likely that in the December 2021 Eurosystem staff projections, the shorter-term inflation outlook for the euro area would once again be revised upwards.