Neutral RBA adds 100-pips to EUR/AUD, 10-yr Aussie bond yield drops

EUR/AUD has added about 100-pips in the aftermath of the RBA rate decision. The cross jumped to a high of 1.4919 and was last seen trading around 1.4910.

The 100-pip jump clearly indicates the market was expecting the RBA to turn hawkish. The central bank took note of the housing market risks, household debt and the negative impact of the persistent strength in the Aussie dollar.  Inflation is expected to increase gradually, while wage growth is seen anaemic at best. 

The statement is by no means hawkish and actually tilts or looks dovish when viewed against the backdrop of the fresh hawkish stance adopted by the ECB, BoE and BOC. 

No wonder, the 10-year Australia bond yield fell almost 5 basis points to 2.586%. The drop in the yield is hurting the Aussie and pushing the EUR/AUD higher. 

EUR/AUD Technical Levels

A break above 1.4927 (June 29 high is resistance on 1-hour chart) would open up upside towards 1.4960 (June 27 high) and 1.50 (zero levels). On the downside, breach of support at 1.4847 (50-DMA) could yield a pullback to 1.4798 (session low), under which a major support is seen at 1.4626 (June 20 low).