AUD/USD and NZD/USD Fundamental Analysis: An RBA Surprise?

It is a busy Tuesday session for the AUD/USD and NZD/USD. The ANZ Commodity Price Index will provide the Kiwi dollar with direction. However, the market focus will be on the Aussie dollar.

Building approvals and current account numbers will draw interest early in the session. We expect building approvals to have more impact. Economists forecast building approvals to tumble by 8.1% versus a 1.0% decline.

While a sharp fall in building approvals would weigh on the Aussie dollar, the RBA interest rate decision and rate statement will be the key driver. Economists expect the RBA to keep the cash rate unchanged at 3.85%, leaving the RBA Rate Statement to move the dial. Elevated inflation favors a hawkish statement.

Looking ahead to the US session, it is a quiet economic calendar. There are no US economic indicators for investors to consider. The lack of stats will leave the pairings in the hands of Fed chatter.

Disappointing ISM Non-Manufacturing PMI numbers from the US eased bets on a June interest rate hike, leaving the RBA to tip the policy divergence scales. According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike slipped from 25.3% to 21.2% on Monday versus 64.2% one week earlier.

AUD/USD Price Action

This morning, the AUD/USD was down 0.02% to $0.66157. A mixed start to the day saw the AUD/USD rise to an early high of $0.66204 before falling to a low of $0.66121.

Technical Indicators

Resistance & Support Levels

The AUD/USD needs to avoid the $0.6611 pivot to target the First Major Resistance Level (R1) at $0.6643. A move through the Monday high of $0.66375 would signal a bullish session. However, the RBA must support a breakout.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6669 and resistance at $0.67. The Third Major Resistance Level (R3) sits at $0.6727.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6585 into play. However, barring an RBA-fueled sell-off, the AUD/USD pair should avoid sub-$0.6550. The Second Major Support Level (S2) at $0.6553 should limit the downside.

The Third Major Support Level (S3) sits at $0.6495.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bullish signals. The AUD/USD sits below the 200-day EMA, currently at $0.66286. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing on the 200-day EMA, delivering bullish signals.

An AUD/USD move through the 200-day EMA ($0.66286) and R1 ($0.6643) would give the bulls a run at R2 ($0.6669) and $0.67. However, a fall through the 100-day EMA ($0.65934) would bring S1 ($0.6585) and the 50-day EMA ($0.65727) into view. An AUD/USD fall through the 50-day EMA would send a bearish signal.

NZD/USD Price Action

This morning, the NZD/USD was up 0.03% to $0.60709. A mixed start to the day saw the NZD/USD fall to an early low of $0.60581 before rising to a high of $0.60735.

Technical Indicators

Resistance & Support Levels

The NZD/USD has to avoid the $0.6065 pivot to target the First Major Resistance Level (R1) at $0.6089. A move through the Monday high of $0.60853 would signal a bullish session. However, the Kiwi would need a risk-on morning session to support a breakout.

In the case of a breakout session, the Kiwi would likely test resistance at the Second Major Resistance Level (R2) at $0.6109. The Third Major Resistance Level (R3) sits at $0.6153.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6045 into play. However, barring a risk-off-fueled sell-off, the NZD/USD should steer clear of sub-$0.60. The Second Major Support Level (S2) at $0.6021 should limit the downside.

The Third Major Support Level (S3) sits at $0.5977.

Looking at the EMAs and the 4-hourly chart, the EMAs were bearish. The NZD/USD sits below the 50-day EMA, currently at $0.60795. The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

An NZD/USD move through the 50-day EMA ($0.60795) and R1 ($0.6089) would give the bulls a run at R2 ($0.6109) and the 100-day EMA ($0.61241). However, failure to move through the 50-day EMA ($0.60795) would leave S1 ($0.6045) in view. A move through the 50-day EMA would send a bullish signal.