US Dollar started weakening against its Australian counterpart ever since the RBA Governor, in his speech on Thursday, provided hawkish comments. The same up-move has been stretched during the current week due to downbeat US indices relating to Empire State Manufacturing & NAHB Housing Market, published on Tuesday. Moreover, improvement in commodity prices also provided a pullback to the currencies of Australia and New Zealand against majority of its counterparts; however, NZD was comparatively stronger than the AUD due to better economic details. Market players are likely to concentrate more on the FOMC meeting minutes, scheduled for release on later Wednesday, in order to determine near-term USD moves.
Given the backdrop, the following is a brief technical overview of the AUDUSD, NZDUSD and AUDNZD.
The horizontal lines, marked near 0.7640 and 0.7880, signals the sideways range of the AUDUSD which is currently trading near 61.8% FE of its late January decline. However, the reversing RSI, from overbought region, suggests pair’s decline towards 0.7750 and 0.7700 mark on the sustained break of 0.7790. Should the pair extends its decline below 0.7700, the 0.7640, 100% FE of the said move, provides strong support to the pair, breaking which the pair can become vulnerable to plunge towards 0.7500 mark before testing the 161% FE, near 0.7415. Alternatively, 0.7880 is likely restricting the pair’s immediate up-move, breaking which the pair is likely testing 0.7930 before surpassing the 0.8000 mark. Moreover, an extended up-move beyond 0.8000, also clearing 0.8030 resistance, could further fuel the pair towards testing 0.8135 – 0.8140 resistance zone.
Overbought RSI, coupled with the inability to break 50% Fibonacci Retracement of its mid-January to February decline, seems forming the base for NZDUSD decline towards 0.7440 support level before testing the ascending trend-channel support, near the psychological mark of 0.7400. ON the break of 0.7400, the pair can decline towards 23.6% Fibo, near 0.7300, before plunging to 0.7170 support level. On the upside, 0.7555 - 0.7560 is likely providing strong resistance to the pair, breaking which 0.7580 and the 61.8% Fibo, near 0.7620, followed by the trend channel resistance, near 0.7640, are likely resistances for the pair. Should it gains enough of strength to break 0.7640 on a closing basis, it can rally towards 0.7700 mark.
Failure to break the 100-day EMA on a closing basis pulled back the pair towards its January lows to the AUDNZD; however, the oversold RSI levels signals a mild pullback towards 1.0410 before extending its decline. If the pair breaks the 1.0410 level, it can test 1.0480 and 1.0520 before rally towards the 23.6% Fibonacci Retracement of its October – January decline, near 1.0570. Moreover, an extended up-move surpassing 1.0520 can fuel the pair to test 1.0620 before rallying again to 100-day EMA & 38.2% Fibo of the said move, near 1.0710. Should the pair fails to hold 1.0330 support, it can extend its decline towards 1.0250 before plunging to the 61.8% FE of the said move, near 1.0200 mark.
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