After the hawkish RBA meeting, EURUAD is nearing a critical resistance and is poised to decide whether to break out above or fall within the trend channel. The RBA held the rates at 4.35%. The main message is that the priority is to tame inflation, and the RBA won’t rule out anything, including further hikes, until the job is done. More hawkish than expected, the RBA anticipates inflation returning to 2.5% only in 2026. Following the meeting, markets are pricing in two cuts this year, starting at the August or September meeting.
(EURAUD Daily Chart)
While traders focus on the hawkish RBA, the weak Euro is also increasing downward pressure. EURUSD is currently testing the 1.075 support, and so far, there is no indication of a bullish reversal. If EURUSD’s support breaks amid the hawkish RBA statements, there is a chance for EURAUD to be rejected from the upper line of the trend channel and start targeting the lower line. Around 1.64, there is a support level that can hold the downside moves, where the Fibonacci 23.6% and the 50-day moving average converge, which AUD bulls should look out for.
The probability of an upside breakout appears somewhat lesser compared to a downside reversal, but strong German factory orders might give hope to EUR bulls. In the event of a break in the downtrend, targets to follow could be 1.6840 and 1.70.
