AUDNZD just staged an FX breakout on its short-term time frame as price broke to the upside of the symmetrical triangle chart pattern. From the 1.1000 major psychological resistance, AUDNZD climbed to the 1.1080 levels in today’s Asian trading session.
This move was spurred by downgraded growth forecasts for New Zealand, as officials weighed in the impact of falling dairy prices on overall economic growth. Apart from that, the RBA meeting minutes turned out less dovish than expected, leading to a relief rally for the Australian dollar and hence triangle FX breakout for AUDNZD.
FX Breakout Scenarios
This FX breakout to the upside could mean more gains for the forex pair, as the pattern is close to 150 pips in height. As of this writing, AUDNZD has climbed by around 80 pips and may have around 70 pips of gains to go. However, price might make a pullback to the broken resistance area before heading further north.
A shallow pullback could last until the 1.1050 minor psychological level before price tests the latest highs at 1.1080. A deeper pullback could go all the way down to the 1.1000 major psychological support before the pair is able to regain buying momentum to sustain the direction of its FX breakout.
Bear in mind that the RBA minutes did reflect some concerns on global uncertainties and the rising value of the Australian dollar, which suggests that traders might still be cautious when it comes to buying up this currency. Governor Stevens reiterated that a period of stability in interest rates will be maintained, confirming that no rate hikes will be seen for the time being.
Meanwhile, the RBNZ holds a much higher interest rate compared to the RBA, which means that traders could still flock back to the higher-yielding New Zealand dollar. Traders might await the results of the latest dairy auction before determining if the FX breakout upside direction can last.
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