What’s up homies! The Kiwi rocketed higher on the session thanks to the latest RBNZ comments, prompting a consolidation breakout in AUD/NZD. Is this a fakeout or the start of a longer-term trend move?
AUD/NZD Downtrend Ahead?
The big economic event of the week didn’t disappoint as the Reserve Bank of New Zealand gave their latest monetary policy statement today, somewhat surprising traders with hints of potentially ending pandemic era monetary policies.
During their statement, the gave the possibility of potentially raising interest rates as early as September of 2022, which is much earlier than what other countries have been considering.
This is likely why the New Zealand dollar jumped higher on the event, especially against the Australian dollar as the Reserve Bank of Australia has said recently that there aren’t likely to be any upward rate adjustments until mid 2024.
This is a pretty big deal for AUD/NZD and it’s likely the bears will continue to have control of the pair for quite some time, until we see improving data from Australia and/or hawkish commentary from the RBA.
In the short-term, the move lower in AUD/NZD after breaking the consolidation area seems to still have legs, but the first support test may be coming soon at the 1.0600 handle. Stochastic is already signaling oversold conditions and the move lower is already two times the daily ATR, so we might see a slowdown pretty soon.
If that’s the case and the market bounces, we’ll be watching out for traders to fade the bounce between 1.0650 – 1.0700 before considering a potential short position for a longer-term play.
If the market blows by 1.0600, then we’ll have to wait and see if that’s a fake our breakout before considering our next move (possibly scaling into a short or wait for a fade back above 1.0600.
What do you all think? Is this the start of a very bullish move for the Kiwi? Will 1.0600 hold as support? Let me know in the comments section below!
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