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Australian Dollar Outlook Bearish as AUD/NZD Breaks Key Support

Australian Dollar Outlook Bearish as AUD/NZD Breaks Key Support

2019-12-05 01:20:00
Dimitri Zabelin, Analyst
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Australian Dollar, New Zealand Dollar, AUD/NZD Technical Analysis – TALKING POINTS

  • AUD/NZD broke below key support, opening door to test early August-lows
  • Breaching below 1.0351 with follow-through may catalyze aggressive selloff
  • RBNZ rate decision and new policy on capital buffers have been key factors

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Early into Asia’s Thursday trading session, AUD/NZD crashed through key support at 1.0484, opening the door to re-test the early-August swing-low at 1.0351. Reaching this level would effectively undo all of the pair’s gains it had garnered throughout August and September.

AUD/NZD – Daily Chart

Chart showing AUD/NZD

AUD/NZD chart created using TradingView

AUD/NZD’s break below key support comes as part of a broader downtrend following the pair’s failure to re-test 2015 descending resistance. The primary catalyst behind the pair’s decline was the RBNZ rate decision where policymakers unexpectedly held rates while markets had priced in a 25-basis point cut. Following the central bank’s announcement, AUD/NZD continued to plummet and broke through several layers of support along the way down.

Selling pressure may continue to accelerate as the pair declines, though buyers may quickly swoop in as the pair approaches 1.0351. A bounce-back may subsequently ensue alongside an abatement in selling pressure. Conversely, if the pair breaks below it, the next target may be 1.0265. This would mark the lowest point since September 2016, excluding the flash crash earlier this year.

AUD/NZD – Daily Chart

Chart showing AUD/NZD

AUD/NZD chart created using TradingView

AUD/NZD TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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