AUD/USD and NZD/USD Fundamental Analysis: Aussie Retail Sales in Focus

It is a relatively quiet Friday session for the AUD/USD and the NZD/USD. Prelim Australian retail sales figures will be in focus this morning.

After the latest RBA 25-basis point interest rate hike, a larger-than-expected rise in retail sales would keep pressure on the RBA to tackle spending and inflation. Economists forecast retail sales to increase by 0.3% in April following a 0.4% rise in March.

While the numbers should draw investor interest, US debt ceiling-related news will impact the AUD/USD and NZD/USD pairs. A continued lack of progress toward raising the ceiling would pressure the Aussie and Kiwi.

Looking ahead to the US session, it is a busy US economic calendar. Core durable goods orders, Core PCE Price Index, personal spending/income, and Michigan consumer sentiment numbers will be in focus.

We expect the Core PCE Price Index numbers to have the most impact. Sticky inflation would fuel bets of a 25-basis point Fed interest rate hike in June and ease expectations of an H2 interest rate cut.

Economists forecast the Core PCE Price Index to increase by 4.6% year-over-year in April versus 4.6% in March.

According to the CME FedWatch Tool, the probability of a 25-basis point Fed interest rate hike in June jumped from 36.4% to 52.2% on Thursday. Better-than-expected labor market and GDP numbers supported the shift in sentiment ahead of today’s inflation numbers.

AUD/USD Price Action

This morning, the AUD/USD was up 0.02% to $0.65057. A mixed start to the day saw the AUD/USD fall to an early low of $0.64994 before rising to a high of $0.65072.

Technical Indicators

Resistance & Support Levels

The AUD/USD needs to move through the $0.6517 pivot to target the First Major Resistance Level (R1) at $0.6535 and the Thursday high of $0.65471. A return to $0.6520 would signal a bullish session. However, economic indicators and debt ceiling news must support a breakout.

In case of a breakout session, the Aussie would likely test resistance at the Wednesday high of $0.66153 but fall short of the Second Major Resistance Level (R2) at $0.6565. The Third Major Resistance Level (R3) sits at $0.6614.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6486 in play. However, barring another risk-off-fueled sell-off, the AUD/USD pair should avoid sub $0.6450. The Second Major Support Level (S2) at $0.6468 should limit the downside.

The Third Major Support Level (S3) sits at $0.6419.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bearish signals. The AUD/USD sits below the 50-day EMA, currently at $0.66102. 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 AUD/USD move through R1 ($0.6535) would give the bulls a run at R2 ($0.6565) and the 50-day EMA ($0.66102). However, failure to move through the 50-day EMA ($0.66102) would leave S1 ($0.6486) in view. An AUD/USD move through the 50-day EMA would send a bullish signal.

NZD/USD Price Action

This morning, the NZD/USD was down 0.02% to $0.60615. A mixed start to the day saw the NZD/USD fall to an early low of $0.60575 before rising to a high of $0.60634.

Technical Indicators

Resistance & Support Levels

The NZD/USD has to move through the $0.6074 pivot to target the First Major Resistance Level (R1) at $0.6103 and the Thursday high of $0.61141. A return to $0.61 would signal a bullish session. However, US debt ceiling news must support a session breakout.

In the case of a breakout session, the Kiwi would likely test resistance at the Second Major Resistance Level (R2) at $0.6144. The Third Major Resistance Level (R3) sits at $0.6214.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6033 in play. However, barring a Washington-induced sell-off, the NZD/USD should steer clear of sub-$0.60. The Second Major Support Level (S2) at $0.6003 should limit the downside.

The Third Major Support Level (S3) sits at $0.5933.

Looking at the EMAs and the 4-hourly chart, the EMAs were bearish. The NZD/USD sits below the 50-day EMA, currently at $0.61968. The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

An NZD/USD move through R1 ($0.6103) would give the bulls a run at R2 ($0.6144) and the 50-day EMA ($0.61968). However, failure to move through the 50-day EMA ($0.61968) would leave S1 ($0.6033) in view. A move through the 50-day EMA would send a bullish signal.