• EUR/AUD strengthened on Tuesday as soured risk sentiment offset hawkish RBA minutes.
• RBA minutes showed policymakers debated holding rates steady or hiking 25 bps to 4.35% at the May meeting.
• Eight of the nine RBA board members saw a stronger case for a rate hike, citing rising inflation risks from the prolonged Middle East conflict and concerns that a 4.1% cash rate may not be restrictive enough.
• Members agreed to closely watch incoming data and evolving risks, while noting monetary policy could not change the near-term inflation path and economic growth was likely to remain below potential for some time.
• Markets are pricing in around a 75% chance of another rate hike in August, with interest rates expected to peak near 4.60% and some risk of rising as high as 4.85%.
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• Immediate resistance is located at 1.6360(38.2%fib), any close above will push the pair towards 1.6504(Higher BB)
• Support is seen at 1.6277( SMA20) and break below could take the pair towards 1.6110(23.6%fib)..
Recommendation: Good to sell around 1.6350, with stop loss of 1.6480 and target price of 1.6290
