AUD/USD and NZD/USD Fundamental Analysis: NZ Business Confidence in Focus

It is a relatively quiet morning for the AUD/USD and the NZD/USD. Business confidence figures from New Zealand will draw interest this morning.

Following the disappointing trade figures for March, a further deterioration in business confidence would be a red flag for the RBNZ. Economists forecast the ANZ Business Confidence Index to rise from -43.4 to -41.0.

On April 5, the RBNZ raised the Official Cash Rate (OCR) by 50 basis points to 5.25%. The survey will reflect business sentiment toward RBNZ monetary policy and the current inflation and interest rate environment. Beyond the headline figure, cost expectations, pricing intentions, and inflation expectations will likely be focal points.

US economic indicators beat forecasts overnight but failed to ease the fear of a US economic recession. With less the one week until the Fed interest rate decision, the probability of a 25-basis point May interest rate hike rose from 75.8% to 76.2% on Wednesday. Significantly, the chances of a 25-basis point move in June increased from 8.3% to 18.5%, according to the CME FedWatchTool.

Later today, US economic indicators will influence the AUD/USD and NZD/USD pairs. Q1 GDP numbers and the weekly jobless claims will be in focus. Softer economic growth and another increase in jobless claims would test the market expectations of a post-May rate hike and fuel recession jitters.

AUD/USD Price Action

The Aussie was up 0.08% to $0.66059. A mixed start to the day saw the AUD/USD fall to an early low of $0.65974 before rising to a high of $0.66061.

Technical Indicators

Resistance & Support Levels

The AUD/USD needs to move through the $0.6610 pivot to target the First Major Resistance Level (R1) at $0.6629 and the Wednesday high of $0.66391. A return to $0.6610 would signal a bullish session. However, market risk sentiment needs to support a pre-US session breakout.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6658. The Third Major Resistance Level (R3) sits at $0.6706.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6582 in play. However, barring another data-fueled sell-off, the AUD/USD pair should avoid sub-$0.6550. The Second Major Support Level (S2) at $0.6563 should limit the downside.

The Third Major Support Level (S3) sits at $0.6515.

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 $0.66747. 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 ($0.6629) would give the bulls a run at R2 ($0.6658) and the 50-day EMA ($0.66747). A breakout from the 50-day EMA would bring the 100-day EMA ($0.66875) into play. However, failure to move through the 50-day EMA ($0.66747) would leave S1 ($0.6582) in view.

NZD/USD Price Action

This morning, the Kiwi was up 0.01% to $0.61166. A mixed start to the day saw the NZD/USD fall to an early low of $0.61141 before rising to a high of $0.61187.

Technical Indicators

Resistance & Support Levels

The NZD/USD has to move through the $0.6125 pivot to target the First Major Resistance Level (R1) at $0.6139 and the Wednesday high of $0.61486. A return to $0.6125 would signal a bullish session. However, the business confidence numbers 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 $0.6162. The Third Major Resistance Level (R3) sits at $0.6199.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6102 in play. However, barring a data-off-fueled sell-off, the NZD/USD should avoid sub-$0.6050. The Second Major Support Level (S2) at $0.6089 should limit the downside.

The Third Major Support Level (S3) sits at $0.6052.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The NZD/USD sits below the 50-day EMA, currently at $0.61674. The 50-day EMA fell back from the 100-day and 200-day EMAs, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($0.6139) would give the bulls a run at R2 ($0.6162) and the 50-day EMA ($0.61674). However, failure to move through the 50-day EMA ($0.61674) would leave S1 ($0.6102) in play. A move through the 50-day EMA would send a bullish signal.