- The New Zealand Dollar gained earlier today on a more hawkish RBNZ, but the Kiwi has since given up much of its earlier gains.
- The Japanese Yen has long term weakness, so long NZD/JPY could be a good trade if we see a bullish breakout to a new high or a retracement to the nearest support level.
- The NZD/JPY currency cross is in a strong, organised, long-term bullish trend.
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Australian Dollar Index (ZXY): Technical Analysis
The Australian Dollar has a bullish long-term trend, being up over both 3 months and 6 months. However, the price chart below shows that much of this action has been very choppy and quite consolidative, so I have no faith in this long-term trend. Over a shorter period, we do see more of a bullish movement, although that seems now to have lost momentum.
Although the price chart below shows the Aussie lost ground with a bearish candlestick yesterday, the price only needs to break above the 67.00 area to trade at a new multi-month high in blue sky, which would be a much more bullish sign. This may not be far away.
Since the CPI data release a few hours ago, we have seen the Aussie make a small increase in value, suggesting a slightly bullish impact.
If the price can get established above 67.00, it is likely to rise further, at least to the next likely resistance area at 67.50. This is something to keep in mind in planning the reward to risk ratio for any long trade here.
The next resistance level above that is likely to be at the historic inflection point at 68.50.
Australian Dollar Index (AXY): Fundamental Analysis
A few hours ago, Australian Consumer Price Index (CPI) data came out which showed an increase in the annualized rate from 3.5% to 3.6%. The rate was expected to fall to 3.4%, so this is a minor hawkish surprise as higher inflation will usually influence a central bank towards a more hawkish path on interest rates.
Despite this small uptick in inflation, the prospect of the Reserve Bank of Australia hiking rates or delaying a cut are seen as very small, so I cannot say that the fundamentals have really changed here.
The problem for Aussie bulls is that growth in the Australian economy has already become so anaemic in recent months that the RBA does not really have any wiggle room on rates – it can delay rate cuts, but not indefinitely.
The small rise we have seen over the past few hours in the Aussie suggests markets may see a slight delay to the next rate cut as a bit more likely after this data release.
AUD/USD Forecast: Technical Analysis
The AUD/USD currency pair has been struggling to rise beyond the resistance level at $0.6656 over recent hours but seems well supported at $0.6641. This currency pair is a bit less bullish technically than the AUD currency Index due to some recent relative strength in the USD.
I must start with some kind of bullish approach, even if its not a strong one, because the price is well supported at $0.6641.
Unfortunately for bulls, $0.6656 looks like it will be strong resistance. However, this helps prove it as a potential pivotal point which can be useful. If the price breaks out and can hold above this level, that will be a bullish sign suggesting a further rise, to potentially as far as $0.6682.
The price is very unlikely to remain within $0.6656 and $0.6641 today, so whichever direction the breakout comes in eventually could be useful. If the price gets below about $0.6635 (the support at $0.6641 is not a very exact level), it could well be likely to continue to fall to $0.6621 – but as we can see, the support levels are quite closely packed down here, so the true potential seems to be to the upside.
Support Levels:
- $0.6641
- $0.6621
- $0.6607
Resistance Levels:
- $0.6656
- $0.6682
- $0. 6696
AUD/JPY Forecast: Technical Analysis
The AUD/JPY currency cross reached a new 16-year high price just a few hours ago. Although it has given up some of its gains in recent hours, today’s price action is quite bullish and looks likely to hold over the longer term. This is due to the continuing long-term weakness of the Japanese Yen.
The hourly price chart below shows that we have a very solid and very long-term bullish trend here, with the price action printing evenly spaced, strong, stairstep support levels. We just saw the nearest level at ¥104.36 hold again.
I think trades here can only be considered on the long side, either as a breakout beyond today’s high or following a bearish retracement to ¥104.36 followed by a bullish bounce there.
Support Levels:
- ¥104.36
- ¥104.13
- ¥103.96
Potential Resistance Levels:
- ¥105.00
- ¥106.00
- ¥107.00
AUD/NZD Forecast: Technical Analysis
The AUD/NZD currency cross has rebounded over the past couple of days after reaching a new 2-month low.
The daily price chart below shows that this currency cross, being comprised of two currencies that are strongly positively correlated, tends to range over the long term. However, it could be argued there is a bullish long-term trend, although the last couple of weeks have seen a strong downwards movement.
The standout technical feature here is the resistance level at $1.0848. This is likely to hold if it is tested again today, so a short trade from a bearish rejection there could be a good trade. Despite that, I suspect there will be better potential opportunities today in either the AUD/USD currency pair or in the AUD/JPY currency cross.
Support Levels:
- $1.0759
- $1.0699
Resistance Levels:
- $1.0848
- $1.0951
- $1.0987
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