• EUR/AUD hovered around 1.6680 on Tuesday as investors awaited upcoming inflation data expected to reinforce a hawkish policy outlook.
• January’s CPI report, due Wednesday, is projected to show annual inflation edging down to 3.7% from 3.8%, with core inflation unchanged at 3.3%.
• The central bank’s head of economic analysis on Tuesday reiterated concerns about pockets of persistent inflation, while signaling the possibility of eventually moving to a monthly core inflation gauge for policy decisions.
• Reserve Bank of Australia Governor Michele Bullock will have an opportunity to respond to the January CPI data when she speaks at a Melbourne University event on Wednesday evening..
• Technical signals are bearish as RSI is heading down at 24, daily momentum studies 5, 9 and 11 DMAs are trending down.
• Immediate resistance is at 1.6793 (SMA20), with a close above potentially pushing the pair to 1.6843 (SMA 20).
• Support is at 1.6624 (23.6% fib), and a break below could push the pair towards 1.6568(Lower BB).
Recommendation: Good to sell around 1.6700, with stop loss of 1.6880 and target price of 1.6620
