AUD & NZD Crosses Diverging


The Australian Dollar has been under duress from expectations of more action from the RBA later in the year. Currently, AUDUSD is locked in a 50 pip range between Support around 0.6750 and Resistance at the 20-day moving average and the psychological 0.6800. The break of the range all depends on the FOMC Minutes tonight and the tone of Jay Powell’s speech on Friday (August 23). Watching and waiting.

AUDNZD is benefiting from the surprise move by the RBNZ two weeks ago to cut interest rates by 0.5%. The Kiwi, a key carry-trade currency due to its traditionally higher interest rates, fell as the news broke and has continue to decline in the last two weeks. The pair breached the key 200-day moving average and psychological 1.0550 level yesterday, which should provide support if the break holds, next Resistance comes at 1.0625.

 The NZDUSD has fallen significantly in the last month (over 5.5%) from 0.6780 down to test 0.6400 today and a 44-month low. Although the RSI has been in the oversold territory for two weeks, the momentum remains biased to the downside. Below 0.6400 support could be found at 0.6350.

Another AUD cross, the AUDCAD broke over the 20-day moving average on last night’s close, confirming a move first initiated on August 13 close at 0.8988. Last night’s close at 0.9025 could run to 0.9050, 0.9080 and the 50-day exponential moving average and another psychological round number at 0.9100. A breach of this level would take the pair back to the previous 100 pip channel between 0.9125-0.9225. The RSI at 47 remains neutral,  the MACD histogram is above the signal line but significantly below the 0 line and the Daily ATR sits around the 60 pips level.

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Stuart Cowell

Head Market Analyst

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