AUDNZD could be in for a long-term selloff, as the pair completed its double top pattern on the 4-hour chart. Price is breaking below the neckline at the 1.1000 major psychological level and could be in for 300 to 400 pips in losses, which is roughly the same height as the formation.
Stochastic is still indicating that sellers are in control but the oscillator has already reached the oversold area. Similarly, RSI is also in the oversold region but hasn’t crossed up yet, which shows that there’s still enough bearish momentum left.
The 100 SMA is starting to cross below the 200 SMA, confirming that the uptrend is over and that a downtrend is about to take place. However, a bounce off the recent levels could lead to a move up to the previous highs around the 1.1400 major psychological resistance.
AUDNZD Fundamental Factors
Gold prices are currently weighing heavily on the Australian dollar for the time being, as data from China last week revealed that the country added fewer than expected gold reserves since 2009. This could mean lower demand for the precious metal, which would mean lower export volumes and production from Australia.
Meanwhile, the Reserve Bank of New Zealand recently cut interest rates and led to Kiwi weakness but the lack of dovishness suggests that the central bank is no longer looking to ease further. This could mean further gains for the Kiwi and a decline for AUDNZD.
There are hardly any event risks for both economies this week, leaving commodity prices to push the pair around in the next few days. The upcoming FOMC statement could impact overall risk appetite, as the inclination to hike interest rates this year could mean less demand for gold and an even weaker Australian dollar. On the other hand, the lack of commitment to tightening before the end of the year could lead to a relief rally for commodities.
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