AUDNZD made higher highs and higher lows, moving inside an ascending channel on its 1-hour time frame. Price just bounced off the resistance and looks ready for another test of support.
Using the Fib tool on the latest swing low and high shows that the 61.8% level lines up with the channel support around 1.0725 and a former resistance level. This also coincides with the 100 SMA dynamic support.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Stochastic is still turning lower to indicate that sellers are on top of their game but the oscillator is dipping into the oversold region to signal a return in bullish pressure.
Australia reported a 1.2% drop in its Westpac consumer sentiment index after previously rising by 0.4%. Chinese CPI also dipped from 1.5% to 1.4% instead of holding steady, signaling weaker inflation pressures down the line.
New Zealand is waiting for the RBNZ decision but this is expected to be downbeat as well. Quarterly inflation and employment have been disappointing so the central bank might blame the Kiwi’s appreciation for this, taking the opportunity to talk down the currency.
Earlier in the week, New Zealand reported a drop from 2.1% to 2.2% in quarterly inflation expectations while Australia has its MI inflation expectations report due in tomorrow’s Asian session.
By Kate Curtis from Trader’s Way