AUD/NZD falls to below key support and eyes a 38.2% Fibonacci retracement

• Risk-on supported Kiwi to poll position overnight.
• Bears below 200 4-hour moving and 21-day moving average.  

AUD/NZD has dropped from a high of 1.0793 and has scored a recent low of 1.0712 in today’s early Asian trade.  The Kiwi has been a top-performer over a 1-day and 4-hour period, stalling its upside on the board at this juncture, however.

There are not a whole lot of fundamental drivers going for the Kiwi on a domestic basis that should see a sustainable  bid, but it has garnered strength from trade-deal traction and a general risk-on tone.  

The US administration and top trade officials, including Trump, continued with their upbeat rhetoric surrounding trade talk progress with China and aim to sign into a contract in November, making way and allowing for negotiations for a phase-2 deal to take place.

Central bank outlook

Meanwhile, from a central bank perspective, considering the lack of domestic scheduled data in the calendar for the week, according to  analysts at Westpac,  markets are now pricing just 4 basis points (bp) of easing at the 5th November  Reserve Bank of Australia meeting, and a terminal rate of 0.48% (RBA  cash rate currently at 0.75%). As for the RBNZ, the analysts note that the market is pricing for Reserve Bank of New Zealand is for 24bp of easing on 13 November, with a terminal rate of 0.57%.

AUD/NZD levels

The price of the cross has broken below the 200 4-hour moving average following  lower highs and mounting pressures with momentum kicking in. The 21-day moving average has also given in and should the price hold below there, bears will be looking for a move to the 1.0630s and the 38.2% Fibonacci retracement located around 1.0620.