• EUR/AUD rose on Tuesday as Australian dollar dropped after the Reserve Bank of Australia softened its tone on the inflation outlook.
• The Reserve Bank of Australia kept rates unchanged, as expected, but stated it had gained some confidence that inflation was moving back towards its target.
• Swaps now imply there is a 54% chance of a rate cut in February, with a first easing more than fully priced in by April next year
• Technical signals are bullish as RSI is higher at 60, 5, 9 and 1 SMAs are trending up
• Immediate resistance is located at 1.6525 (23.6%fib), any close above will push the pair towards 1.6573(Higher BB)
• Support is seen at 1.6433(38.2 %fib ) and break below could take the pair towards 1.6354(50 %fib).
Recommendation: Good to buy around 1.6480 , with stop loss of 1.6400 and target price of 1.6550
