• EUR/AUD advanced on Friday as the Australian dollar weakened amid growing expectations of a more dovish RBA stance.
• Australia’s central bank chief said Thursday that a cautious, gradual approach to policy easing is appropriate, noting only a slight softening in the labour market despite the recent uptick in unemployment.
• RBA is seen cutting rates by 25 basis points at its August 12 meeting, with markets pricing in an 88% probability.
• The RBA surprised markets by holding rates at 3.85% earlier this month, defying expectations of a 25bps cut. In a rare split decision, the board opted to await more data on jobs and inflation before its August policy call.
• Immediate resistance is located at 1.8058(38.2%fib), any close above will push the pair towards 1.8106(Higher BB)
• Strong support is seen at 1.7732(50%fib) and break below could take the pair towards 1.7677(Lower BB).
Recommendation: Good to buy around 1.7870, with stop loss of 1.7800 and target price of 1.7950
