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AUD Slammed by RBA Outlook- NZD Resilience Here to Stay?

AUD Slammed by RBA Outlook- NZD Resilience Here to Stay?

Michael Boutros, Strategist

Daily Winners and Losers

AUD_Slammed_by_RBA_Outlook-_NZD_Resilience_Here_to_Stay_body_Picture_7.png, AUD Slammed by RBA Outlook- NZD Resilience Here to Stay?AUD_Slammed_by_RBA_Outlook-_NZD_Resilience_Here_to_Stay_body_Picture_6.png, AUD Slammed by RBA Outlook- NZD Resilience Here to Stay?AUD_Slammed_by_RBA_Outlook-_NZD_Resilience_Here_to_Stay_body_Picture_5.png, AUD Slammed by RBA Outlook- NZD Resilience Here to Stay?

The New Zealand dollar is the top performer against a stronger greenback with the pair holding its ground for a fractional advance of just 0.04% ahead of the European close. Risk appetite remains heavy in early US trade with the greenback higher against most of its major counterparts as equity markets struggle to pare early losses. On a daily basis the kiwi is now flirting with a topside break of the confluence of the 23.6% Fibonacci retracement taken from the December 15th advance and channel resistance at 8230. Although RSI has now breached trendline resistance, the exchange rate lacks follow through with only a break above the 50-day moving average at 8260 validating the breach.

AUD_Slammed_by_RBA_Outlook-_NZD_Resilience_Here_to_Stay_body_Picture_4.png, AUD Slammed by RBA Outlook- NZD Resilience Here to Stay?

The scalp chart shows the NZDUSD holding within the confines of a shot-term ascending channel formation with the pair testing interim resistance at the 61.8% Fibonacci extension taken from the March 22nd and 29th troughs at 8240. A test of the 8260 barrier mentioned earlier is likely with a break there eyeing subsequent topside targets at the 78.6% extension at 8275, the 83-figure, and the 100% extension at 8320. Interim support rests with the 50% extension at 8217 backed by the 38.02% extension at 8193 and the 23.6% extension at 8163. An unlikely break below channel support dating back to March 22nd negates our interim bias with such a scenario eyeing subsequent support levels at 8135 and last week’s low at 8115.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

8096

100-Day SMA

8005

50-Day SMA

8260

2011 NZD HIGH

8842

AUD_Slammed_by_RBA_Outlook-_NZD_Resilience_Here_to_Stay_body_Picture_3.png, AUD Slammed by RBA Outlook- NZD Resilience Here to Stay?AUD_Slammed_by_RBA_Outlook-_NZD_Resilience_Here_to_Stay_body_Picture_2.png, AUD Slammed by RBA Outlook- NZD Resilience Here to Stay?

The Australian dollar is the weakest performer against the greenback with a loss of 0.45% on the session as the pair remains within the confines of a descending channel formation dating back to the 2012 high. Although the Reserve Bank of Australia (RBA) held interest rates as expected at 4.25%, remarks made central bank Governor Glenn Stevens cited that while the current policy remains “appropriate,” the board “judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.” The comments weighed heavily on broader risk appetite with the aussie reversing sharply just ahead of key resistance at the confluence of the 38.2% Fibonacci retracement taken form the December 15th advance and channel resistance at 1.0475. We reserve this level as our topside limit with a breach above negating our bearish bias on the aussie. Key daily support rests with the 50% extension at 1.0360.

AUD_Slammed_by_RBA_Outlook-_NZD_Resilience_Here_to_Stay_body_Picture_1.png, AUD Slammed by RBA Outlook- NZD Resilience Here to Stay?

The scalp chart shows the AUDUSD breaking below channel support dating back to the March lows before rebounding off key support mentioned earlier at 1.0355/60. Price action lacked directional momentum in early US trade with the exchange rate currently straddling the 61.8% Fibonacci extension taken from the March 19th and 27th crests at 1.0370. A break below interim support at 1.0355 offers further conviction on our bias with such a scenario eyeing subsequent support targets at 1.0340, the 78.6% extension at 1.0320 and the 1.03-figure. Topside resistance stands at the 50% extension at 1.0406 backed by the 38.2% extension at 1.0440 and channel resistance dating back to the 1st of March (just shy of 1.0485).

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.0395

100-Day SMA

1.0383

50-Day SMA

1.0614

2011 AUD HIGH

1.1079

---Written by Michael Boutros, Currency Strategist with DailyFX.com

Join Michael on Thursday morning for a Live Scalping Webinar at 1330GMT (9:30ET)

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex

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

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