AUD/USD and NZD/USD Fundamental Analysis: Bulls Eye Soft US CPI Report

It is a busy session for the AUD/USD and NZD/USD. Later this morning, Australian business and consumer confidence numbers will garner interest. Following the surprise RBA interest rate hike and signs of a waning Chinese economy, the figures will reflect sentiment toward the economic outlook and consumer and business spending plans.

Economists forecast the NAB Business Confidence Index and Westpac Consumer Sentiment to hold steady in June.

Looking ahead to the US session, it is a busier day on the economic calendar. The US CPI Report will be the main report of the day. Hotter-than-expected US inflation numbers would tip the monetary policy divergence scales in favor of the Greenback.

The probability of a June rate hike fell from 29.9% to 20.3% on Monday, according to the CME FedWatch Tool. However, the chance of a 25-basis point July Fed rate hike increased from 52.8% to 59.3%. Significantly, bets on a 50-basis point July interest rate hike fell from 17.1% to 13.3% over the last week.

AUD/USD Price Action

This morning, the AUD/USD was up 0.06% to $0.67538. A mixed start to the day saw the AUD/USD fall to an early low of $0.67423 before rising to a high of $0.67563.

Technical Indicators

Resistance & Support Levels

The AUD/USD needs to move through the $0.6754 pivot to target the First Major Resistance Level (R1) at $0.6769 and the Monday high of $0.67735. A move through R1 ($0.6769) would signal a breakout session.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6788 and resistance at $0.68. The Third Major Resistance Level (R3) sits at $0.6822.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6735 in play. However, barring a US CPI Report-fueled sell-off, the AUD/USD pair should avoid sub-$0.67. The Second Major Support Level (S2) at $0.6720 should limit the downside.

The Third Major Support Level (S3) sits at $0.6687.

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 $0.66722. The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA narrowing on the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($0.66722) would support a breakout from R1 ($0.6769) to give the bulls a run at R2 ($0.6788) and $0.68. However, a fall through S1 ($0.6735) would bring S2 ($0.6720) into view. An AUD/USD fall through the 50-day EMA ($0.66722) would send a bearish signal.

NZD/USD Price Action

This morning, the NZD/USD was up 0.09% to $0.61263. A mixed start to the day saw the NZD/USD fall to an early low of $0.61127 before rising to a high of $0.61303.

Technical Indicators

Resistance & Support Levels

The NZD/USD has to move through the $0.6147 pivot to target the First Major Resistance Level (R1) at $0.6147 and the Monday high of $0.61527. A return to $0.6120 would signal a bullish session.

In the case of a breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.6173 and resistance at $0.62. The Third Major Resistance Level (R3) sits at $0.6220.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6100 in play. However, barring a US CPI Report-fueled sell-off, the NZD/USD should steer clear of the Second Major Support Level (S2) at $0.6080.

The Third Major Support Level (S3) sits at $0.6033.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bullish signals. The NZD/USD sat above the 100-day EMA, currently at $0.61111. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

An NZD/USD breakout from R1 ($0.6147) and the 200-day EMA ($0.61477) would give the bulls a run at R2 ($0.6173). However, a fall through the 100-day EMA ($0.61111) and S1 ($0.6100) would bring the 50-day EMA ($0.60932) into view. A fall through the 50-day EMA would send a bearish signal.