AUD/USD and NZD/USD Fundamental Analysis: Powell Delivers Support

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

The lack of stats will leave the pair to respond further to the overnight Fed monetary policy decision, FOMC projections, and the all-important FOMC press conference.

On Wednesday, the Fed lifted rates by 25 basis points, in line with expectations. However, an upward revision to the median Federal Funds Rate to 4.3% and an unchanged 2023 peak of 5.1% were hawkish.

Fed Chair Powell poured cold water on a US dollar breakout. While acknowledging that economic indicators came in stronger than expected, Powell discussed the possible influences of the banking sector on monetary policy, saying,

“We no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that some additional policy firming may be appropriate.”

The shift in policy outlook delivered support to the AUD/USD and NZD/USD pairs this morning.

Later today, US jobless claims will draw investor interest and move the dial. Tighter labor market conditions would pressure the Fed vis-à-vis monetary policy tightening. Economists forecast initial jobless claims to rise from 192k to 197k. Sub-200k levels reflect tight labor market conditions.

AUD/USD Price Action

The Aussie was up 0.12% to $0.66920. A mixed start saw the AUD/USD fall to an early low of $0.66790 before rising to a high of $0.66950.

Technical Indicators

The AUD/USD needs to move through the $0.6701 pivot to target the First Major Resistance Level (R1) at $0.6742 and the Wednesday high of $0.67588. A return to $0.67 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 $0.6750 but fall short of the Second Major Resistance Level (R2) at $0.6799. The Third Major Resistance Level (R3) sits at $0.6898.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6643 in play. However, barring a Fed-fueled sell-off, the AUD/USD pair should avoid sub-$0.66. The Second Major Support Level (S2) at $0.6602 should limit the downside.

The Third Major Support Level (S3) sits at $0.6504.

Looking at the EMAs and the 4-hourly chart, the EMAs send mixed signals. The AUD/USD sits below the 100-day EMA, currently at $0.66987. The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA eased back from the 200-day EMA, delivering mixed signals.

A move through the 100-day EMA ($0.66987) would give the bulls a run at R1 ($0.6742) and the 200-day EMA (0.67526). However, a fall through the 50-day EMA ($0.66775) would bring S1 ($0.6643) into play. A fall through the 50-day EMA would send a bearish signal.

NZD/USD Price Action

This morning, the Kiwi was up 0.09% to $0.62254. A mixed morning saw the NZD/USD fall to an early low of $0.62112 before rising to a high of $0.62278.

Technical Indicators

The NZD/USD needs to avoid the $0.6225 pivot to target the First Major Resistance Level (R1) at $0.6278 and the Wednesday high of $0.62828. A return to $0.6250 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 $0.63 but fall short of the Second Major Resistance Level (R2) at $0.6336. The Third Major Resistance Level (R3) sits at $0.6448.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6167 into play. However, barring a Fed-fueled sell-off, the NZD/USD pair would likely avoid sub-$0.6150 and the Second Major Support Level (S2) at $0.6113.

The Third Major Support Level (S3) sits at $0.6002.

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The NZD/USD sits below the 200-day EMA, currently at $0.62362. The 50-day converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A move through the 200-day EMA ($0.62362) would support a breakout from R1 ($0.6278) to bring $0.63 into play. However, a fall through the 100-day ($0.62090) and 50-day ($0.62071) EMAs would give the bears a run at S1 ($0.6167). A bullish cross of the 50-day EMA through the 100-day EMA would send a bullish signal.