Technical Bias: Bullish
Key Takeaways
- Aussie gained post better than expected trade balance figures.
- A critical break noted in the AUDNZD pair which might result in more upside moving ahead.
- AUDNZD support seen at 1.1160 and resistance ahead at 1.1320.
The Australian dollar strength in combination with the New Zealand dollar weakness has increased a lot of pressure on AUDNZD buyers recently causing a sharp rally in the pair.
Australian Retail Sales and Trade Balance
The Australian retail sales and trade balance data was released by the Australian Bureau of Statistics earlier during the Asian session. The Australian retail sales increased by 0.4% in July 2014, down from 0.6% as expected by the market. Moreover, the balance on goods and services registered a deficit of $1,359m in July 2014 in seasonally adjusted terms. This was a bit less than the forecast. The Aussie was seen trading a touch higher after the release.
Technical Analysis
There was a critical bearish trend line on the daily timeframe for the AUDNZD, which acted as a resistance on numerous occasions. The mentioned trend line was broken a few days back, which has increased the chances of further gains in the near term. The pair has breached the 61.8% Fibonacci retracement level of the last major drop from the 1.1579 high to 1.0487 low, and heading towards the 76.4% fib level of 1.1321. There is a chance of a minor pullback from the current or a bit higher levels. In that situation, the broken resistance zone around the 1.1160-20 levels might act as a strong support on the downside.
The daily RSI is around the extreme levels, which escalates the possibility of a correction in the short term. On the upside, initial resistance can be seen around the 1.1320 level, followed by the all-important 1.1500 swing level.
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