AUD Analysis and Talking Points
AUD/USD | 0.6700 Likely to Underpin
Having rejected trendline resistance and falling short of testing the 200DMA, AUD/USD saw notable pullback from its recent highs, break below both the 100 and 50DMA. Consequently, momentum indicators are tilted to the downside as the bearish DMI remains elevated, although this has eased slightly, which in turn suggests that further selling may begin to slowdown. As such, we look towards 0.6750 as an area of support for AUD/USD with larger bids likely to stem from the psychological 0.6700 handle. Given that there is little on the Australian economic schedule, external factors pertaining to the US-China phase 1 agreement will likely dictate price action in the pair. On the topside, resistance is situated at 0.6815 (50DMA) and 0.6840 (100DMA)
AUD/USD Price Chart: Daily Time Frame (Nov 2018 – Nov 2019)
AUD/NZD | Reversal Eyes Crucial Support
Last week, we highlighted that risk-reward favoured a pullback in AUD/NZD given that the upside in the cross appeared to be exhausted. Following the RBNZ’s surprise decision to maintain interest rates at 1.00%, the cross saw a sharp reversal, dropping over 200pips. However, AUD/NZD is now facing its first key test on the downside with the 100DMA residing at 1.062, a level the cross has not closed below since August, while the 200DMA is situated at 1.0562. Alongside this, the bearish DMI looks to be topping out at 30, which is a level that the indicator has rarely been able to consolidate above, which raises the prospect of a potential reprieve in the cross. That said, with the RBNZ on a temporary halt and Australian data (labour market) continuing to disappoint, interest rate differentials are signalling a move towards 1.05.
AUD/NZD Price Chart: Daily Time Frame (Nov 18 – Nov 19)
PRIOR REPORT
Australian Dollar Technical Forecast: AUD/USD, AUD/NZD Risks Reversal
--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.mcqueen@ig.com
Follow Justin on Twitter @JMcQueenFX
