financetom
News
financetom
/
News
/
Aussie, Kiwi Dollar Outlook: AUD, NZD Price Setups Ahead of the RBNZ
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Aussie, Kiwi Dollar Outlook: AUD, NZD Price Setups Ahead of the RBNZ
May 20, 2024 4:22 AM

Aussie Dollar (AUD/USD, AUD/NZD) Analysis

AUD in focus ahead of the RBA minutes as risk assets march onRBNZ highly unlikely to move on rates as inflation remains above targetMain risk events: RBA minutes, RBNZ rate decision, Fed speakersThe analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

Recommended by Richard Snow How to Trade AUD/USD

Aussie Dollar in Focus Ahead of RBA Minutes as Risk Assets March on

The Aussie dollar holds around the pre-pandemic low of 0.6680 as the impressive bullish continuation unfolds. The bullish pennant, which developed from early to mid-May, revealed a strong bullish continuation which was largely influenced by the move lower in US inflation.

Price action holds at elevated levels after intra-day pullbacks were repelled before testing the 0.6644 level that previously capped higher prices. In a week where that sees a notable drop-off in the number of ‘high importance’ data, volatility may wane and the US dollar may stand to benefit from a gradual recovery. Conditions of lower volatility tend to see a move towards higher yielding currencies, something that could see the US and Kiwi dollars find some respite.

Holding above 0.6680 keeps the door open to a bullish advance while a break below 0.6644 places the recent bullish momentum into question.

AUD/USD Daily Chart

RBNZ Highly Unlikely to Move on Rates as Inflation Remains Above Target

The Reserve Bank of New Zealand is all but certain to maintain interest rates at a 15-year high in the early hours of Wednesday morning, with markets pricing in less than 4% change we’ll see a rate cut.

The bank is likely to require greater confidence that inflation is moving back towards the 1-3% range before deciding to cut interest rates and markets anticipate the first of such adjustments to take place in Q4. Inflation sits at 4% - a level that remains too high for the central bank to hint at looser financial conditions.

Implied RBNZ basis point moves per meeting

The AUD/NZD chart broadly presents an uptrend which has slowed down in the second quarter of the year. Negative divergence has appeared (lower highs on the RSI, whilst price action printed a higher high), suggesting a longer-term slowdown in momentum which may ultimately result in a reversal of the longer-term trend. It is also worth noting the potential forming of a head and shoulders pattern but remains far from completion.

However, on a shorter-term basis, price action reveals the potential for another leg higher. On Friday, prices hovered around the 50-day simple moving average (SMA) where it appeared to launch a bid higher. Today, the pair is moving higher and the last three candles (including today) appear on track to form a morning star formation – potentially.

Should the bullish pattern emerge, the swing high of 1.1030 reemerges as the next level of resistance, followed by 1.1052 – the June 2023 swing high. The move will need to be reassessed in the event prices close below the 50 SMA or test 1.0885.

AUD/NZD Daily Chart

If you're puzzled by trading losses, why not take a step in the right direction? Download our guide, Traits of Successful Traders, and gain valuable insights to steer clear of common pitfalls that can lead to costly errors.

Recommended by Richard Snow Traits of Successful Traders

Main Risk Events this Week

There is a sizeable number of Fed speakers this week so things could get a little noisy in dollar crosses including AUD/USD. In addition, US Treasury Secretary Janet Yellen is due to make an appearance while the RBNZ rate decision and RBA minutes provide the main antipodean data for the week. On Friday, keep an eye on the final University of Michigan Consumer Sentiment report after the preliminary figures shocked markets.

Customize and filter live economic data via our DailyFX economic calendar

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Yen skids to three-month trough as Japanese governing coalition loses majority
Yen skids to three-month trough as Japanese governing coalition loses majority
Oct 28, 2024
The Japanese yen skidded in Asian trade on Monday to three-month lows against the US dollar, after the election loss by the current Japanese parliamentary governing coalition, which could impede future interest rate hikes by the Bank of Japan. The yen is also pressured by a surge in US 10-year treasury yields, amid speculation about a cautious stance by the...
Euro rebounds ahead of major eurozone data
Euro rebounds ahead of major eurozone data
Oct 27, 2024
The euro rose in European trade on Thursday against a basket of major rivals after a wave of losses across three sessions, with the euro eventually settling above 3-⅕ month lows against the US dollar. It comes ahead of major data on the eurozone sectors later today, which would shed important light on the health of the European economy in...
Yen skids to three-month low as the gap in treasury yields widens
Yen skids to three-month low as the gap in treasury yields widens
Oct 26, 2024
The yen fell in European trade on Wednesday against a basket of major rivals, sharpening the losses for the third straight session against the US dollar and hitting three-month lows amid concerns about a wider US-Japan gap in government treasury yields. Recent bearish remarks from Japanese officials hurt the odds of a third BOJ interest rate hike this year, while...
US dollar heads for fresh weekly profit
US dollar heads for fresh weekly profit
Oct 26, 2024
The US dollar rose in European trade on Friday against a basket of major rivals, resuming gains after a short hiatus, and approaching three-month highs once more. The gains come amid a surge in US 10-year treasury yields after bullish remarks from some Fed officials, and strong US data, which hurt the odds of an aggressive pace for US interest...
Copyright 2023-2025 - www.financetom.com All Rights Reserved