I’m seeing this long-term range bottom holding on AUD/NZD, and monetary policy differences could take this pair back to the top.
Long AUD/NZD Idea
Both the RBA and the RBNZ are on the dovish end of the monetary policy spectrum these days, with the latter being more downbeat than the former. In their latest policy announcement, the RBNZ hinted that they might cut interest rates sometime this year, and market watchers seem to have set their sights on May.
Price bounced off the bottom of its long-term range visible on the daily time frame with this announcement and might be aiming back for the top around the 1.1200 mark or at least the middle of the range.
However, stochastic is already indicating overbought conditions or exhaustion among buyers. Turning lower could lead to another dip to the bottom of the range or a quick pullback that could let me enter at a better price.
Last week’s price action revealed that the Kiwi barely took advantage of risk-on flows while the Aussie was able to draw support from U.S.-China trade developments. Another round of positive data from China could benefit the Aussie this week while leaving NZD behind once again.
I’m gonna keep my eyes peeled for a quick pullback to the 1.0400-1.0450 area and will set my stop below the range support if I’m able to hop in.
What do you guys think?
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