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Shorting the Retrace in EUR/USD and AUD/USD

Posted Tuesday, December 21, 2021 by
Skerdian Meta • 2 min read

Will EUR/USD resume the uptrend soon?

The cryptocurrency market has caught everyone’s attention this year, after making massive gains in different periods, while the volatility has been enormous, offering many great trading opportunities. We have concentrated our long-term signals on cryptocurrencies, but we continue to issue trading signals in Forex pairs as well, although most of them are short-term trades.

Yesterday, we opened two Forex signals, in EUR/USD and AUD/USD. These pairs have been bearish for many months now, since the FED started giving signs that they are going to finally accept that inflation is surging in the US. Back in early summer, when the USD started to turn bullish, inflation moved above 5%, while now it is heading for 7%.

AUD/USD H4 Chart – The 100 SMA is Providing Resistance

MAs keep pushing AUD/USD down

The FED has started to tighten the monetary policy and they are getting increasingly worried, as we have heard in recent comments. Some FED members want a faster pace of tightening, so the USD has reasons to rally, while the European Central Bank (ECB) is still in the process of trying to accept inflation.

The minutes of the meeting of the Reserve Bank of Australia were released last night, with the RBA deciding to start the tapering process of the QE program in next month’s meeting, and to end it in May 2022. But that was anticipated, so there was not much reaction to this news. However, the RBA did sound worried about the new Covid variant.

The minutes said that “these options reflected the expectation that the economy would continue to bounce back. The emergence of the Omicron variant was a new source of uncertainty, but it was not expected to derail the recovery.”

So, EUR/USD and AUD/USD have been retracing higher, although the larger trend is still bearish. The retrace might be over soon, as moving averages are providing resistance for both pairs, while buyers seem to have stopped pushing higher. We have been long on these two pairs since last night, so we are waiting for the bearish trend to resume.