Following the RBNZ’s decision to cut interest rates by 0.25% to 3.25% today, AUDNZD broke above the neckline of the inverse head and shoulders pattern on its daily time frame. This suggests that the pair is in for more gain, possibly by around 700 pips or the same height as the chart formation.
The pair is nearing the next resistance at the 1.1200 major psychological level and could make another upside break if bullish momentum is strong enough. For now, the short-term 100 SMA is still moving below the longer-term 200 SMA, suggesting that the downtrend might still resume.
Stochastic is also pointing down, suggesting the possibility of a pullback before the pair heads further north. RSI is moving up, reflecting that buyers are in control of price action.
AUDNZD Fundamental Factors
The RBNZ interest rate cut is likely to keep the Kiwi weak against most of its forex rivals, especially since Governor Wheeler suggested that further easing moves are likely and that he’d like to see the Kiwi depreciate further.
After this dovish announcement, Australia printed a strong employment report and allowed the pair to extend its rallies. The country added 42K jobs in May, higher than the projected 12.1K gain and enough to make up for the previous month’s decline. The jobless rate also fell to 6.0%, which is its yearly low.
There are no major reports lined up for the rest of the week from both economies, which suggests that the ongoing trend could continue. European session and US session traders have yet to catch up to the latest developments in Australia and New Zealand, which means that the pair could have another leg higher.
Of course gold price trends could also play a role in determining the Aussie’s price action and a rebound is expected off the previous decline.
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