AUDNZD Bounces Off Support With More Upside Potential

AUDNZD has been trading around its highest levels since December 2018. It has recently retraced some of its gains providing a potential buy at the pullback.

The currency pair has been on an uptrend for quite sometime and has broken through major resistance at 1.0800. Connecting the lows of October 24, November 4, and November 12, AUDNZD looks like it just bounced off support at the trend line. The area around 1.0770 is also the 61.8% Fibonacci retracement level drawing from the low of November 4 to the high of November 7.

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FUNDAMENTAL ANALYSIS

Fundamentals also align with the bias for a long. Yesterday, we posted that the Commitment of Traders report (COT) revealed that long positions on the Australian dollar have picked up. One of the reasons why is due to the Reserve Bank of Australia’s (RBA) less-aggressive tone towards adding further stimulus.

On the other hand, more and more market participants are anticipating another rate cut from the Reserve Bank of New Zealand (RBNZ) when it meets tomorrow at 1:00 am GMT.

Earlier in today’s trading, reports coming from Australia and New Zealand spurred the currency pair’s rally. NAB Business Confidence index printed a reading of 2 which reveals that business conditions have improved in October after coming in flat in September. On the other hand, two-year inflation expectations in New Zealand printed lower at 1.80% from initially being estimated at 1.86%.

If the Aussie is able to sustain its strength, we could soon see AUDNZD test resistance around 1.1000 where it established highs in March 2017 and September to October 2018.Download our latest quarterly market outlook for our longer-term trade ideas.

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