EUR/AUD Price Forecast: Rallies to two-day high, but not out of the woods

EUR/AUD sees a notable recovery, advancing 0.74% despite a disappointing IFO business climate from Germany.

A potential head-and-shoulder pattern indicates possible continued declines, with key supports at 1.6100, 1.6003, and 1.5963. A further drop could potentially target 1.5900.

Technical resistances are set at the 50-day SMA of 1.6266 and the psychological mark of 1.6300 if the rally extends.

The EUR/AUD recovered and rallied above the 1.6100 figure, hitting a new two-day high of 1.6163 as risk appetite improved. Softer-than-expected IFO readings in Germany were not an excuse for buyers to buy the shared currency, which the EUR/USD pair have underpinned. At the time of writing, the cross-pair trades at 1.6138, up by 0.74%.

EUR/AUD Price Forecast: Technical outlook

The EUR/AUD is still downward biased despite posting a solid recovery. Yet, the head-and-shoulder chart pattern remains in play, and failure to clear the November 7 low of 1.6161, the latest cycle low, could pave the way for a bearish continuation.

If EUR/AUD drops below 1.6100, the next support would be the November 25 low of 1.6003, followed by the November 22 low of 1.5963. If surpassed, the next support would be 1.5900.