AUD/NZD dropping towards key support ahead of RBNZ
Fawad Razaqzada May 10, 2017 6:19 PM
The AUD/NZD has retreated noticeably in recent weeks. The NZD has been supported by a slight improvement in New Zealand data and thanks to firmer dairy prices, while the AUD has been undermined by slumping metal prices. The Reserve Bank of New Zealand will be making its latest policy decision tonight and the focus of the FX markets will be on the NZD as a result.
The AUD/NZD has retreated noticeably in recent weeks. The NZD has been supported by a slight improvement in New Zealand data and thanks to firmer dairy prices, while the AUD has been undermined by slumping metal prices. The Reserve Bank of New Zealand will be making its latest policy decision tonight and the focus of the FX markets will be on the NZD as a result. No change is expected to be announced, however. But the wording of the policy statement could cause the kiwi to move sharply nonetheless. Ahead of the RBNZ policy decision, the NZD is being bought with NZD/USD rallying and AUD/NZD slumping. Clearly, some market participants are expecting to hear hawkish remarks. But will it be a classic “buy the rumour, sell the news” type of a reaction?
If so, it will tie in well with the technicals, for the AUDN/NZD is heading towards a key support area. As can be seen, the cross has left behind at least two untested broken resistance levels at 1.0570 and at 1.0530. Once resistance these levels could turn into support. In addition to these horizontal lines, two Fibonacci levels and point D of an AB=CD price pattern also convergence between 1.0530 and 1.10570. The 61.8% retracement level against last year’s low comes in at 1.0535 while the 127.2% extension level of the swing from point B to C comes in at 1.0565. Furthermore, the 200-day moving average, which is now pointing higher, is coming in at close proximity, around 1.0585.
Given the confluence of all these technical levels, I would be very surprised if we didn’t get a bounce around these levels. But with the recent trend being bearish, the upside may be limited in the short-term to the now broken support area between 1.0645 and 1.0680. But a potential rally above this range would not only end the current bearish bias, it would be very bullish in my view.
Source: eSignal and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.