AUD/USD and NZD/USD Fundamental Analysis: China PMIs to Set the Tone

It is a quiet morning for the AUD/USD and NZD/USD. There are no economic indicators from Australia or New Zealand for investors to consider.

With the Labor Day holidays in major financial centers, trading volumes will be on the light side.

However, the RBA is in action on Tuesday, with sentiment toward monetary policy likely to move the dial. Australian inflation figures for March support another hold on cash rates this Tuesday. However, the RBA may continue to warn of further rate hikes should inflationary pressures fail to ease further.

The annual inflation rate softened from 7.8% to 7.0%, with the producer price index rising by 5.2% versus 5.8% in February. Significantly, the producer price index suggested sticky inflation, which may remain a concern for Board members.

However, private sector PMI numbers from China will set the tone. The NBS Manufacturing PMI fell from 51.9 to 49.2, with the Non-Manufacturing PMI declining from 58.2 to 56.4. The contraction in the manufacturing sector was significant, with the post-COVID recovery running out of steam.

The threat of a US banking crisis could also weigh on the pairings, with news of US regulators attempting to avert a banking crisis by selling First Republic Bank (FRC) to a large US bank likely to weigh on market risk sentiment. JP Morgan Chase (JPM) was reportedly the front-runner. Failure to find a buyer by Sunday afternoon (US) could see First Republic Bank suffer the same fate as Signature Bank and Silicon Valley Bank.

Later today, US economic indicators will move the dial. The ISM Manufacturing PMI will move the dial. However, investors should consider the prices and employment sub-components.

AUD/USD Technical Indicators

Resistance & Support Levels

The AUD/USD needs to avoid the $0.6610 pivot to target the First Major Resistance Level (R1) at $0.6646. A move through the Friday high of $0.66423 would signal a bullish session. However, market risk sentiment should support a pre-US session breakout.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6679. The Third Major Resistance Level (R3) sits at $0.6747.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6577 into play. However, barring a risk-off-fueled sell-off, the AUD/USD pair should avoid sub-$0.6570 and the Second Major Support Level (S2) at $0.6541.

The Third Major Support Level (S3) sits at $0.6472.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The AUD/USD sits below the 50-day EMA, currently at $0.66525. 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.

A move through R1 ($0.6646) and the 50-day EMA ($0.66525) would give the bulls a run at the 100-day EMA ($0.66727) and R2 ($0.6679). However, failure to move through the 50-day EMA ($0.66525) would leave S1 ($0.6577) in view.

NZD/USD Technical Indicators

Resistance & Support Levels

The NZD/USD has to avoid the $0.6139 pivot to target the First Major Resistance Level (R1) at $0.6203. A move through the Friday high of $0.61872 would signal a bullish session. However, market risk sentiment must support a pre-US session breakout.

In the case of a breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.6227. The Third Major Resistance Level (R3) sits at $0.6290.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6139 into play. However, barring a risk-off-fueled sell-off, the NZD/USD should steer clear of the Second Major Support Level (S2) at $0.6100.

The Third Major Support Level (S3) sits at $0.6036.

Looking at the EMAs and the 4-hourly chart, the EMAs send more bullish signals. The NZD/USD sits below the 100-day EMA, currently at $0.61835. The 50-day EMA narrowed to the 100-day EMA, with the 100-day EMA closing in on the 200-day EMA, delivering bullish signals.

A move through the 100-day EMA ($0.61835) would support a breakout from R1 ($0.6203) and the 200-day EMA ($0.62065) to give the bulls a run at R2 ($0.6227). However, a fall through the 50-day EMA ($0.61835) would bring S1 ($0.6139) into play. A fall through the 50-day EMA would send a bearish signal.