The AUD and NZD Find Resistance
Rowan Crosby • 2 min read
The FOMC sent out some dovish signals yesterday, but the AUD and NZD couldn’t quite break out.
The message was loud and clear from Fed Boss Jerome Powell, who reiterated that rates would not be rising any time soon. The news really put some pressure on the USD and that in turn translated to a bit of upside in the AUD/USD and NZD/USD. However, both key risk pairs appear to have run out of steam.
For the AUD/USD, we have seen a rally big push higher into this 0.7000 level, but as I’ve been saying all week long, there is going to be plenty of work to do to break this level. In fact, we can see that price rally did attempt the break but got smashed back down quickly which is often a sign of heavy selling pressure.
The long wick we see on the chart below, suggests just that but is also the type of price action that shows up when markets thin out around announcements. Nevertheless, 0.7000 is a bit of a holding point for the time being.
And with the RBA equally unlikely to be raising rates, this looks like a pretty good area for some further consolidation. Although the RBA was a little more optimistic.
The price action in the Kiwi is similar in that we’ve had that nice big push to the upside. The price action here is looking like a classic double top at the moment and that is bearish. We will need to see a slide under the 0.6500 level for a really good short trigger in my opinion.
We can see that same sort of long wick which was created for all the same reasons.
The lows sit around 0.6470 and that makes it a pretty good short in that region if the sellers try and run this through the lows. But we will need to see the Greenback push a bit higher to slow this trend.