AUD/USD and NZD/USD Fundamental Analysis: Kiwi Trade in Focus

It is a busy day for the NZD/USD. Following softer-than-expected wholesale inflation numbers on Thursday, New Zealand trade data will be in focus this morning.

Weak trade data would weigh on the Kiwi, with disappointing economic indicators from China fueling recessionary fears. Economists forecast the New Zealand trade deficit to widen from NZ$16.4 billion to NZ$17.08 billion year-over-year.

However, it is a quiet session for the AUD/USD, with no economic indicators from Australia for investors to consider. The lack of stats will leave the AUD/USD in the hands of market risk sentiment and central bank chatter.

Later today, FOMC members Williams and Bowman will deliver speeches ahead of Fed Chair Powell. With sticky inflation and very tight labor market conditions, the Fed Chair could surprise the markets with the talk of a June interest rate hike.

According to the CME FedWatchTool, the probability of a 25-basis point June interest rate hike stood at 36.2%, up from 10.7% on May 11. The chances of a 25-basis point interest rate cut stood at 0.0%, unchanged from one week earlier.

While hawkish Fed bets are rising, the employment numbers from Australia likely shifted the RBA into a wait-and-see mode, with the RBNZ needing to consider the macroeconomic environment beyond New Zealand’s borders.

AUD/USD Price Action

This morning, the AUD/USD was down 0.01% to $0.66213. A mixed start to the day saw the AUD/USD fall to an early low of $0.66144 before rising to a high of $0.66237.

Technical Indicators

Resistance & Support Levels

The AUD/USD needs to move through the $0.6631 pivot to target the First Major Resistance Level (R1) at $0.6658. A return to $0.6650 would signal a bullish session. However, debt ceiling news and central bank chatter must support a breakout.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6694 and resistance at $0.67. The Third Major Resistance Level (R3) sits at $0.6757.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6595 into play. However, barring a risk-off-fueled sell-off, the AUD/USD pair should avoid sub $0.6565. The Second Major Support Level (S2) at $0.6568 should limit the downside.

The Third Major Support Level (S3) sits at $0.6505.

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 $0.66772. The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

An AUD/USD move through R1 ($0.6658) would support a breakout from the 50-day EMA ($0.66772) to target the 100-day EMA ($0.66864), R2 ($0.6694), and the 200-day EMA ($0.66945). However, failure to move through the 50-day EMA ($0.66772) would leave S1 ($0.6595) 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 flat at $0.62251. A range-bound start to the day saw the NZD/USD fall to an early low of $0.66202 before rising to a high of $0.62291.

Technical Indicators

Resistance & Support Levels

The NZD/USD has to move through the $0.6233 pivot to target the First Major Resistance Level (R1) at $0.6262 and the Thursday high of $0.62691. A return to $0.6250 would signal a bullish session. However, US debt ceiling news and NZ trade data must support a session breakout.

In the case of a breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.6298 and resistance at $0.63. The Third Major Resistance Level (R3) sits at $0.6364.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6196 in play. However, barring a risk-off-fueled sell-off, the NZD/USD should steer clear of sub-$0.6150. The Second Major Support Level (S2) at $0.6167 should limit the downside.

The Third Major Support Level (S3) sits at $0.6102.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bearish signals. The NZD/USD sits below the 200-day EMA, currently at $0.62391. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

An NZD/USD through the EMAs would support a breakout from R1 ($0.6262) to target R2 ($0.6298). However, failure to move through the 200-day EMA ($0.62391) would leave S1 ($0.6196) in play. A move through the 50-day EMA ($0.62528) would send a bullish signal.