Technical Analysis – AUD, NZD

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The commodity risk currencies, namely the Australian and Kiwi dollars, in recent weeks have taken on sharply diverse paths. While the Aussie remained resilient and continues to push higher, the Kiwi Dollar remains very subdued and susceptible to the downside. This stark difference in the two currencies does warrant a close glance especially against the Greenback.

AUDUSD Technical Analysis

AUDUSD (0.8): AUD ignored the rate cuts from the RBA earlier this week. Despite slashing interest rates to a record low of 2%, the Aussie simply spiked lower and reversed from its lows and continued to push higher. Even the more recent jobs report that was released earlier today, which wasn’t really impressive failed to contain the Aussie’s rally against the Greenback.

AUDUSD Daily Charts, 07/05/2015
AUDUSD Daily Charts, 07/05/2015

AUDUSD has been gaining since May 4th after the daily price closed with a doji candlestick showing indecision among traders. The doji came after three straight days of selling in the Australian Dollar and at the time of writing, today would mark a third day of gains if price closes above 0.8 levels.

There is a risk that the AUDUSD could see further gains, when considering a longer term double bottom support near 0.7558 through 0.759 support zone. This double bottom gives an upside target to 0.809 with the neckline at 0.7887. It is interesting to note that the doji candlestick on the daily charts, formed just below 0.7887 levels and hence it wasn’t really surprising to see the current strength in the Australian dollar.

The price level at 0.809 is an important level to watch as it marks a longer term broken support from December 2014 that is yet to be tested for resistance. It will be interesting to see how the Aussie reacts to this price point.

NZDUSD Technical Analysis

NZDUSD (0.75): The Kiwi has been under pressure for the past few weeks and the fact that it continues to fall to a weaker Greenback shows that the Kiwi is currently one of the weaker currencies among its peers. After the RBNZ warned of rate cuts, the Kiwi could not help revive its losses. The strong selling was further fueled by a dismal April jobs numbers which also saw the New Zealand unemployment rate rise to 5.8%

NZDUSD - H4 Charts, 07/05/2015
NZDUSD – H4 Charts, 07/05/2015

Technically, the Kiwi formed a double top pattern near 0.773 price levels and after breaking the neckline at 0.754, the currency continues to drift lower. The double top gives a downside measured move to 0.744 while a longer term support level comes near 0.744 through 0.74 levels. A break below this level will see the Kiwi decline to 0.7204 levels, the lows that were previously tested around March and February this year. Is it quite likely that another attempt to break this level will see a strong demand for the Kiwi which should help support the pair.

For the moment, the bear flag pattern identified after the break out of the trend line shows that the NZDUSD could move even lower towards 0.7396 through 0.7371 price levels.


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