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AUD Technical Analysis Overview: AUD/USD, AUD/NZD

AUD Technical Analysis Overview: AUD/USD, AUD/NZD

2019-09-24 08:00:00
Justin McQueen, Analyst
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AUD Analysis and Talking Points

  • AUD/USD | Dovish RBA Governor Would Put 2019 Low at Risk
  • AUD/NZD | Bullish Momentum Fading as Key Resistance Holds

AUD/USD | Dovish RBA Governor Would Put 2019 Low at Risk

The downtrend remains intact for AUD/USD as it hovers around last weeks low of 0.6760. Alongside this, DMIs on the daily, weekly and monthly timeframe continue to tilt to the downside, consequently, this increases the risk that the pair could make a move towards the 0.6700 support zone. The near-term driver for the Australian Dollar will be comments from RBA Governor Lowe in which a confirmation that a rate cut may be needed at the October meeting would put pressure on the pair with risks of the 2019 low (0.6677) being tested. That said, given that a rate cut is largely priced in at 74%, a more wait-and-see stance from the Governor would likely see a sharp kneejerk move higher with break above 0.6800 before a test of 0.6830.

AUD/USD Price Chart: Daily Time Frame (Oct 2018 – Sep 2019)

AUD Technical Analysis Overview: AUD/USD, AUD/NZD

AUD/NZD | Bullish Momentum Fading as Key Resistance Holds

The recent bullish momentum in the cross appears to have stalled following the pullback from the 61.8% Fibonacci retracement level (1.0832), while the upside bias in the daily DMI has also eased. Consequently, eyes are on near-term support at 1.0725 (50% Fibonacci retracement). As a reminder, alongside RBA Governor Lowe, focus will also be on the RBNZ in which they will announce their latest rate decision. As it stands, markets are currently 22% priced in for a 25bps cut at the September meeting and 80% priced in for a November rate cut. However, commentary from RBNZ Governor Orr at last months Jackson Hole Symposium hinted that they were willing to wait-and-see following their surprise 50bps cut in August. The stance has also been reiterated from the RBNZ’s shadow board who had largely agreed that another rate cut is not required at this present stage. With this in mind, a combination of a dovish RBA and a neutral RBNZ could see a material move lower in the cross, breaking below 1.0700 and eye a test of 1.0620. Of note, bearish positioning in NZD is at extreme levels, which in turn raises the risk of a sharp rally in the currency.

AUD/NZD Price Chart: Daily Time Frame (Jun 18 – Sep 19)

AUD Technical Analysis Overview: AUD/USD, AUD/NZD

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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