AUD/NZD has been in a strong downtrend since November last year but it appears that the selloff might soon come to an end, as reversal chart pattern has formed on its daily time frame based on this forex trading review.
The pair has formed a double bottom after bouncing a couple of times off 1.0500 and finding resistance around the 1.0900 region. Price is currently making a test of the neckline, with an upside break likely to confirm that further gains are in the cards.
On the other hand, if the resistance holds, another test of the 1.0500 support might take place. In this case, the pair would form a triple bottom, which is still a valid reversal chart pattern. However, if another test of resistance fails, it could be indicative of ranging market behavior.
Forex Trading Review and Analysis
The fundamental forex trading review bias for this pair is to the downside, as the RBNZ (Reserve Bank of New Zealand) is more inclined to hike interest rates compared to the RBA (Reserve Bank of Australia). Data from New Zealand has also been relatively stronger, as the latest trade balance figure came in line with expectations of a 920 million NZD surplus.
On the other hand, quarterly inflation data from Australia has disappointed. The subdued increase in price levels has led plenty of market watchers to believe that the RBA will stick to its neutral stance and refrain from tightening monetary policy until next year. Data from Australia has been a mix of good and bad, confirming that the central bank should hold off any monetary policy changes in the near term.
Bear in mind though that both central banks have been attempting to jawbone their respective currencies. After all, Australia and New Zealand are both commodity-dependent and export-driven economies. This means that they are inclined to maintain the strong demand for their products in the international market, and an appreciating local currency threatens to make their products less affordable.
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