AUDNZD Forex Forecast – Correction to Broken Support

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AUDNZD Forex Forecast - Correction to Broken Support

AUDNZD Forex Forecast - Correction to Broken Support

AUDNZD made a strong break below a major support zone last month but it looks like a pullback is in order. Price found support at the 1.0500 major psychological level before retreating to the 200 SMA dynamic inflection point and 38.2% Fibonacci retracement level based on the swing high and low on the 4-hour time frame.

The broken support level lines up with the 50% Fibonacci retracement level around the 1.0900 major psychological mark. RSI is already on the move down, which means that sellers are taking control of the game and ready to push price back to the previous lows. However, stochastic appears to be turning higher so the correction might not be over yet.

The 100 SMA is below the 200 SMA, indicating that the longer-term selloff is likely to carry on. However, the short-term SMA is moving a bit higher, which suggests the possibility of an upward crossover and an uptrend.

AUDNZD Fundamental Factors

Event risks for this setup include the release of Australia’s jobs report this week, with stronger than expected data likely to spur gains for the Aussie. Recall that the RBA statement wasn’t too dovish recently, hinting that the central bank may already be done with its rate cuts.

The RBNZ Financial Stability Report gave a bit of support for the Kiwi, as policymakers assured that the banking sector remains strong despite risks from the slowing dairy sector and the booming housing market. Governor Wheeler refrained from jawboning the currency, leading some market watchers to think that a rate cut for December isn’t set in stone yet.

There are no other major reports lined up from both economies for the rest of the week, but the upcoming data from China could have a significant impact on Aussie price action. Earlier in the week, trade data and CPI readings missed expectations so investors are on the lookout for more disappointments from the industrial production, fixed asset investment, and retail sales figures.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com