Australian economic data supporting the RBA policy statement is expected to push the Australian dollar higher; can the 200-day moving average hold?
AUD/NZD Fundamental Background: AUD is supported by multiple positives
AUD/NZD bulls have enjoyed some upside support since mid-December, as signs of slowing U.S. inflation provided risk assets such as the Aussie (aka AUD) and NZD more positive news. The Aussie received further support from Australia, one of China’s top trading partners in commodity exports, as China eased coronavirus restrictions while providing fiscal support to boost economic growth. In addition, the Reserve Bank of Australia (RBA) has recently expressed concern about the firming inflation in Australia, which has led to hawkish comments that further rate hikes are needed.
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Considering that there is no major economic data coming out of New Zealand (as shown in the chart below), the focus of AUD/NZD will be on the performance of economic data in Australia and the United States that may change the global risk sentiment.
economic calendar
Source: DailyFX Economic Calendar
AUD/NZD technical analysis: Spotlight on potential breakout of rising wedge
Chart drawn by Warren Venketas via IG platform
The daily chart of AUD/NZD shows that the current exchange rate is trading within a rising wedge pattern (black part). Generally speaking, a rising wedge is usually a harbinger of an imminent price downside, but this may not be the case for AUD/NZD. AUD/NZD is currently trading within two important ranges and could break out in either direction. If the daily candlestick closes below or above the 200-day simple moving average (SMA, blue line), which is the important psychological level of 1.1000, it is expected to further rise to the recent shock high of 1.1045. Meanwhile, AUD/NZD bears will be targeting a break below wedge support around 1.0940, which could expose the lower 1.0879.
The rising wedge breakout is just around the corner, how to plan in advance?
Important resistance:
Important support:
(Written by Warren Venketas and translated by Lisa)
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