AUD/USD and NZD/USD Fundamental Analysis: Economic Divergence in Play

It is a quiet start to the week for the AUD/USD and the NZD/USD pairs. There are no economic indicators from Australia or New Zealand to provide the pairs with direction.

With no economic indicators to consider, we expect a further reaction to the US prelim private sector PMI numbers from Friday. The March PMIs revealed a marked divergence in the respective macroeconomic environments, favoring the greenback.

The all-important US Services PMI jumped from 50.6 to 53.8 in March, with the manufacturing PMI up from 47.3 to 49.3. In contrast, the Australian private sector contracted in March, with the Composite PMI Output Index falling from 50.6 to a three-month low of 48.1.

Beyond the reaction to the Friday US PMI numbers, market risk sentiment will also influence. Putin talked nuclear, announcing plans to place nuclear weapons in Belarus, with banking sector woes another curveball for investors to continue to grapple with.

Fed Chair Powell spoke of an imminent credit crunch, which could materially impact demand, a price-negative scenario for both pairings.

AUD/USD Price Action

The Aussie was up 0.12% to $0.66507. A mixed start to the day saw the AUD/USD fall to an early low of $0.66356 before steadying.

Technical Indicators

The AUD/USD needs to move through the $0.6654 pivot to target the First Major Resistance Level (R1) at $0.6683 and the Friday high of $0.66942. A return to $0.6675 would signal a bullish session. However, the Aussie Dollar would need risk-on sentiment to support a breakout day.

In case of a breakout session, the Aussie would likely test resistance at $0.67 and test the Second Major Resistance Level (R2) at $0.6723. The Third Major Resistance Level (R3) sits at $0.6792.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6614 in play. However, barring a risk-off-fueled sell-off, the AUD/USD pair should avoid sub-$0.6550. The Second Major Support Level (S2) at $0.6585 should limit the downside.

The Third Major Support Level (S3) sits at $0.6516.

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 $0.66778. The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA ($0.66778) and R1 ($0.6683) would give the bulls a run at the 100-day EMA ($0.66949) and R2 (0.6723). However, failure to move through the 50-day EMA ($0.66778) would leave S1 ($0.6614) and sub-$0.66 in play. A move through the 50-day EMA would send a bullish signal.

NZD/USD Price Action

This morning, the Kiwi was up 0.12% to $0.62062. A bullish start to the day saw the NZD/USD rise to an early high of $0.62106 before easing back.

Technical Indicators

The NZD/USD needs to move through the $0.6214 pivot to target the First Major Resistance Level (R1) at $0.6238. A return to $0.6220 would signal a bullish session. However, market risk sentiment will remain the key driver.

In the case of a breakout session, the Kiwi would likely test resistance at the Friday high of $0.62534 but fall short of the Second Major Resistance Level (R2) at $0.6277. The Third Major Resistance Level (R3) sits at $0.6339.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6175 in play. However, barring a risk-off-fueled sell-off, the NZD/USD pair would likely avoid sub-$0.6150. The Second Major Support Level (S2) at $0.6152 should limit the downside.

The Third Major Support Level (S3) sits at $0.6090.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The NZD/USD sits below the 100-day EMA, currently at $0.62152. The 50-day closed in on the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A breakout from the 100-day ($0.62152) and 50-day ($0.62180) EMAs would give the bulls a run at the 200-day EMA ($0.62365) and R1 ($0.6238). However, failure to move through the 100-day ($0.62152) would leave S1 ($0.6175) in play. A move through the 50-day EMA would send a bullish signal.