EUR/AUD Price Forecast: Slumps on bets for dovish ECB, bears eye 1.6200

• EUR/AUD falls 0.20%, influenced by expectations of ECB policy easing.
• Technical indicators show a shift to neutral as EUR/AUD invalidates head-and-shoulders pattern.
• Key resistances await at 1.6254 (50-day SMA) and 1.6300; supports positioned at 1.6168 and 1.6003.
• Support level are seen at 1.6200, 1.6168 and 1.6003.

The Euro took a hit and dived against the Australian Dollar as traders seemed convinced that the European Central Bank (ECB) would lower borrowing costs at the upcoming meeting. The chances of the ECB cutting 50 basis points remain, as most Eurozone economies remain subdued. At the time of writing, the EUR/AUD trades were at 1.6231, down 0.20%.

EUR/AUD Price Forecast: Technical outlook

The EUR/AUD shifted from a downward to a neutral bias. Once prices cleared the head-and-shoulders (H&S) chart pattern's neckline, the H&S was invalidated, indicating that buyers' bulls were gathering momentum.

On its way north, the EUR/AUD found acceptance at 1.6200 before extending its gains, but bulls must reclaim the 50-day Simple Moving Average (SMA) at 1.6254 to keep their hopes of testing 1.6300.

Conversely, if bears move in and push the EUR/AUD below the H&S neckline below 1.6200, this could pave the way for further downside. On that outcome, the first support would be the November 27 low of 1.6168, followed by the November 25 daily low at 1.6003.

EUR/AUD Price Chart - Daly