FxWirePro: EUR/AUD attracts selling interest, vulnerable to more downside

• EUR/AUD dipped on Wednesday as higher commodity prices and mounting expectations of RBA rate hikes lifted the Australian dollar.

• Broad commodity strength supported the Aussie, with gold and copper at record highs underpinning Australia’s export base..

• RBA minutes signaled the board is paving the way for a rate hike if inflation does not ease, putting focus on the Jan 28 Q4 CPI data.

• Analysts expect that a stronger-than-expected Q4 core inflation reading could prompt the RBA to raise rates at its February meeting, with the January 28 CPI release seen as pivotal.

• The RBA holds its first meeting of the year on February 3 and markets imply a 28% chance of a quarter-point increase in the 3.6% cash rate.

•  Immediate resistance is located at 1.7614(Daily high), any close above will push the pair towards 1.7649(38.2%fib).

•  Support is seen at 1.7563(Lower BB) and break below could take the pair towards 1.7481(23.6%fib).

Recommendation: Good to sell around 1.7580with stop loss of 1.7700 and target price of 1.7500