AUD/USD and NZD/USD Fundamental Analysis: Aussie Eyes $0.70

It is a quiet morning session for the AUD/USD and NZD/USD. Early in the session, the New Zealand economy was in focus, with the Business NZ PMI numbers for May drawing interest.

After disappointing Q1 GDP numbers, market sensitivity to the stats has heightened. The numbers were bearish, with the Business NZ PMI falling from 49.1 to 48.9 in May. Economists forecast an increase to 50.2.

However, there are no economic indicators from Australia or China for investors to consider, leaving market risk sentiment to move the dial ahead of the US session.

Looking ahead to the US session, it is a relatively quiet day on the US economic calendar. Prelim Michigan Consumer Sentiment and Expectation figures for June will be in focus. After a mixed set of numbers on Thursday, the Consumer Sentiment and Expectations Indexes would need to improve markedly for any influence on the Fed policy outlook.

Considering the impact of Thursday’s retail sales and jobless claims on Fed sentiment, a pickup in consumer sentiment would suggest higher demand for goods that could translate into a more hawkish Fed and support a July move.

With the US economic calendar on the light side, Fed chatter will draw interest. FMOC members Bullard and Waller are among the first to speak after the end of the Fed blackout period.

According to the CME FedWatch Tool, the probability of a 25-basis point July rate hike stood at 67.0% on Thursday, up from 62.3% on Wednesday.

AUD/USD Price Action

This morning, the AUD/USD was up 0.03% to $0.68835. A range-bound start to the day saw the Aussie fall to an early low of $0.68785 before rising to a high of $0.68852.

Technical Indicators

Looking at the EMAs and the 4-hourly chart, the EMAs sent bullish signals. The AUD/USD sat above the 50-day EMA, currently at $0.67437. The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA crossing through the 200-day EMA, delivering bullish signals.

A hold above S1 ($0.6800) and the 50-day EMA ($0.67437) would support a breakout from R1 ($0.6928) to give the bulls a run at R2 ($0.6974). However, a fall through S1 ($0.6800) would bring the 50-day EMA ($0.67437) and S2 ($0.6718) into view. An AUD/USD fall through the 50-day EMA would send a bearish signal.

Resistance & Support Levels

The AUD/USD needs to avoid the $0.6846 pivot to target the First Major Resistance Level (R1) at $0.6928. A return to $0.69 would support a breakout. However, the Aussie Dollar would need risk-on sentiment to deliver a bullish Friday.

In case of a breakout session, the Aussie would likely test resistance at $0.6950 but fall short of the Second Major Resistance Level (R2) at $0.6974. The Third Major Resistance Level (R3) sits at $0.7103.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6800 into play. However, barring a risk-off-fueled sell-off, the AUD/USD pair should avoid sub-$0.68 and the Second Major Support Level (S2) at $0.6718.

The Third Major Support Level (S3) sits at $0.6590.

NZD/USD Price Action

This morning, the NZD/USD was up 0.06% to $0.62358. A mixed start to the day saw the Kiwi fall to an early low of $0.62288 before rising to a high of $0.62368.

Technical Indicators

Looking at the EMAs and the 4-hourly chart, the EMAs sent bullish signals. The NZD/USD sat above the 200-day EMA, currently at $0.61535. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above S1 ($0.6176) and the 200-day EMA ($0.61535) would support a breakout from R1 ($0.6265) to give the bulls a run at R2 ($0.6299). However, a fall through S1 ($0.6176) and the 200-day ($0.61535) would bring the 50-day EMA ($0.61414) into view. A fall through the 50-day EMA would send a bearish signal.

Resistance & Support Levels

The NZD/USD has to avoid the $0.6210 pivot to target the First Major Resistance Level (R1) at $0.6265. A move through the Thursday high of $0.62430 would signal a bullish session. However, market risk sentiment would need to support a bullish session.

In the case of a breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.6299. The Third Major Resistance Level (R3) sits at $0.6388.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6176 into play. However, barring a risk-off-fueled sell-off, the NZD/USD should steer clear of sub-$0.6150 and the Second Major Support Level (S2) at $0.6121.

The Third Major Support Level (S3) sits at $0.6031.