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We’ve got a major catalyst coming up for the New Zealand dollar, making the uptrend in AUD/NZD for both a reversal lower and a potential pop higher.

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Fresh Market Headlines & Economic Data:

Bitcoin plummets as doubts grow over sky-high valuation

Nasdaq falls more than 1% as tech sell-off continues, Dow trades off low on Powell

Powell says inflation is still ‘soft’ and the Fed is committed to current policy stance

Richmond manufacturing index hits a new high at 46 in February vs. 39 in January

Fed Chair Powell’s prepared remarks to Congress, Feb. 23, 2021

Annual inflation up to 0.9% in the euro area; Up to 1.2% in the EU in January 2021

UK retailers see sharp fall in sales and mounting job losses, CBI says

UK unemployment rate rises to highest level since early 2016

U.K. accepts EU request for more time to scrutinize Brexit deal


Upcoming Potential Catalysts on the Economic Calendar

Bank of Canada Macklem speech at 5:30 pm GMT
API Crude oil stocks at 9:30 pm GMT
Australia Construction work, Wage prices at 12:30 am GMT (Feb. 24)
RBNZ Monetary Policy Statement at 1:00 am GMT (Feb. 24)
RBNZ Press Conference at 2:00 am GMT (Feb. 24)

What to Watch: AUD/NZD

AUD/NZD 1-Hour Forex Chart
AUD/NZD 1-Hour Forex Chart

On the one hour chart of AUD/NZD above, we can see a textbook trend higher marked by higher ‘lows’. Last week, the 1.0800 handle proved to be a tough nut to crack, but the bulls were finally able to do so on Monday, pushing the pair as high as 1.0828 before pullback to the rising trendline. With bulls firmly in control, is this another opportunity to play the trend higher at a better price?

Well, that’s likely up to the upcoming monetary and interest rate policy from the Reserve Bank of New Zealand. Expectations are for the RBNZ to express optimism on the economic recovery, but downplay expectations of any kind of monetary policy tightening.

If this this scenario plays out, it’s likely AUD/NZD will maintain its uptrend, and if that rising trendline does hold, it could be a solid buying opportunity for both swing and longer-term bulls.

If we get a surprise from the RBNZ hinting at tightening monetary policy (an incredibly small, but viable possibility given the “V” shaped recovery), then the Kiwi could explode higher, creating a downside trendline break setup on AUD/NZD. That scenario would likely draw in momentum players, so consider a market short for you high risk traders and for you more conservative types, wait for the initial reaction to die down and look for resistance to form below the rising ‘lows’ pattern.