AUD/NZD cross to venture into deeper waters?
|The Research Team briefly touched on the AUD/NZD in an earlier release, but given the underperformance in the cross today, it deserves another look.
Daily Support Giving Way
The pair continues to echo a bearish vibe following Australia’s July CPI inflation (Consumer Price Index) report, which displayed price pressures had eased across all key measures. This is likely to weigh on the AUD in anticipation of further rate cuts out of the Reserve Bank of Australia (however, do bear in mind that investors are still only pricing in one cut for December at the moment).
The Team noted that daily support from NZ$1.0880 exhibited a vulnerable tone and could cede ground, paving the way for follow-through selling towards an area of daily support between NZ$1.0724 and NZ$1.0756. As you can see, price action has failed to keep a hold on current support in recent movement.
H1 Support Breach on the Radar
Short-term flows on the H1 timeframe show declines have been confined between the limits of a descending channel, extended from the high of NZ$1.0981 and a low of NZ$1.0897. Following the release of Aussie CPI inflation numbers, you will see that, in one fell swoop, the cross briefly rallied from channel support to channel resistance, which happened to share chart space with another resistance coming in at NZ$1.0900 and held its position.
Therefore, H1 support from NZ$1.0852 could be a base to watch, as a break south of this barrier would help corroborate the daily timeframe’s breach of support and potentially chart the way towards another H1 support level from NZ$1.0827.
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