26 Jul 2013
AUD/NZD bouncing modestly after a convincing break of 1.1543 support
FXstreet.com (Barcelona) - A nasty break of projected support for AUD/NZD at 1.1543 Thursday was followed by a late session bounce, but more downside is almost a certainty according to technicians.
Central bank policies in the two countries driving the action in this cross
Last week’s Reserve Bank of Australia policy statements were initially perceived by traders as being less dovish than anticipated. In fact, the Aussie Dollar actually rallied versus most of its currency trading partners for one session following the release of the RBA’s meeting minutes. This week’s policy statements out of the Reserve Bank of New Zealand made the RBA’s comments pale in comparison in terms of hawkishness. The combination of the two central banks’ statements sent the already weak AUD/NZD tumbling through projected support at 1.1543 despite a glaring oversold condition. The cross bottomed out Thursday at 1.1394.
Late Wednesday and into Thursday, however, the AUD/NZD managed to muster a modest corrective bounce. As of 02:48 GMT, the cross was hovering around 1.1457.
Technicians remain bearish on AUD/NZD
Short-term oversold bounces notwithstanding in AUD/NZD, technicians say that now that the 1.1543 projected support has been violated that a move down to 1.0823 is likely in the coming months. Short-term support for AUD/NZD comes in at Thursday’s low of 1.1394. Below that, only Fibonacci projections are there to provide potential short-term stopping points. The next Fibonacci-based potential support comes in at 1.1374. Short-term resistance for AUD/NZD comes in at the 7/19 intraday low at 1.1543 and is followed by Wednesday’s peak at 1.1641.
Central bank policies in the two countries driving the action in this cross
Last week’s Reserve Bank of Australia policy statements were initially perceived by traders as being less dovish than anticipated. In fact, the Aussie Dollar actually rallied versus most of its currency trading partners for one session following the release of the RBA’s meeting minutes. This week’s policy statements out of the Reserve Bank of New Zealand made the RBA’s comments pale in comparison in terms of hawkishness. The combination of the two central banks’ statements sent the already weak AUD/NZD tumbling through projected support at 1.1543 despite a glaring oversold condition. The cross bottomed out Thursday at 1.1394.
Late Wednesday and into Thursday, however, the AUD/NZD managed to muster a modest corrective bounce. As of 02:48 GMT, the cross was hovering around 1.1457.
Technicians remain bearish on AUD/NZD
Short-term oversold bounces notwithstanding in AUD/NZD, technicians say that now that the 1.1543 projected support has been violated that a move down to 1.0823 is likely in the coming months. Short-term support for AUD/NZD comes in at Thursday’s low of 1.1394. Below that, only Fibonacci projections are there to provide potential short-term stopping points. The next Fibonacci-based potential support comes in at 1.1374. Short-term resistance for AUD/NZD comes in at the 7/19 intraday low at 1.1543 and is followed by Wednesday’s peak at 1.1641.