- AUD/NZD sliding and a topping formation could be on the cards.
- All eyes will be centred on the RBNZ this month.
AUD/NZD fell from 1.0690 to 1.0608 overnight and is sticking to a tighter range in Tokyo today between 1.0608 and 1.0634, flat at the time of writing.
NZD followed EUR and GBP up but AUD didn’t, as the dollar gave back some ground. AUD/NZD has been quite a show of late, rallying to as high as 1.0751 before sliding back to the recent lows as the Aussie takes a dive. NZD/USD ranged sideways around 0.6140. NZD followed EUR and GBP up but AUD didn’t, as the dollar gave back some ground.
Markets reacted negatively overnight with a focus on the European Central Bank, with new funding measures from the ECB that failed to impress. Commodities were not kind to the Aussie following a grim outlook for the eurozone on the back of the shocking European economic data coupled with another 3.5m rise in jobless claims in the US. World trade is on its knees and that will be likely reflected by a softer Aussie going forward should markets switch gears again.
“Aussie and Kiwi were the market darlings of April, but Kiwi is the darling at the minute as the big dollar languishes,” analysts at ANZ bank explained. “This cross got torched on relative policy expectations, which seemed premature, but what’s Australia’s next move? It’ll be more easing of some sort too.”
Focus on the RBNZ again
From here, it is going to be a focus on the Reserve Bank of New Zealand, presuming the nation keeps its COVID-19 under control. Regardless, at this juncture, markets will continue to look for more from the central bank when it meets on May 13. “Speculation has been mounting that Governor Orr will announce an expansion to the new QE programme. Additionally, talk has been circulating that the central banks could push interest rates below zero,” analysts at Rabobank explain. “As a consequence the NZD is vulnerable. We see scope for NZD/USD dipping lower towards 0.57 on a 3-month view.”
AUD/NZD levels
With the price beginning to show a bearish intension, on the ide, the 1.0377 falls in as a mean reversion target of the late March rally. The 38.2% of the same range falls in-line with a critical structure made up of prior support and resistance, this falls in at 1.0466. However, on a continuation, bulls will seek a break above 1.0850 and the 2019 August and Nov highs.
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