AUD/USD and NZD/USD Fundamental Analysis: RBA and Fed in Focus

It is a busy morning for the AUD/USD and the NZD/USD pairs. Trade data from New Zealand drew interest this morning.

Following a more marked economic contraction in Q4, today’s numbers had to show light at the end of the tunnel. The stats didn’t disappoint, with the trade deficit narrowing from NZ$2,113 million to NZ$714 million in February. Economists forecast a more modest narrowing to NZ$1,450 million.

According to NZ Stats,

• Goods exports rose by NZ$41 million (0.8%) to NZ$5.2 billion, with imports rising by NZ$40 million (0.7%) to NZ$5.8 billion.
• In late January and February 2023, tropical cyclones Hale and Gabrielle caused damage and disruption, which could impact trade near term.

Later this morning, the AUD/USD will also be in action, with the RBA meeting minutes in focus. Philip Lowe delivered an unexpectedly dovish policy outlook in early March, signaling a near-term pause. The minutes would need to reveal similar sentiment to move the dial.

However, the collapse of Silicon Valley Bank and Signature Bank (SBNY) and the almost collapse of Credit Suisse Group (CS) may dilute the influence of the minutes. Central banks have another headache to consider in the battle against inflation.

Later today, US existing home sales figures should have a limited impact on the markets. The focus will be on the Fed and the juggling act of nursing the banking sector and tackling inflation.

AUD/USD Price Action

The Aussie was up 0.06% to $0.67191. A mixed start saw the AUD/USD fall to an early low of $0.67110 before steadying.

Technical Indicators

The AUD/USD needs to avoid the $0.6704 pivot to target the First Major Resistance Level (R1) at $0.6741. A move through the Monday high of $0.6730 would signal a bullish session. However, the Aussie Dollar would need risk-on sentiment and the RBA meeting minutes to support a breakout day.

In the case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6768 and resistance a $0.68. The Third Major Resistance Level (R3) sits at $0.6832.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6677 into play. However, barring another risk-off-fueled sell-off, the AUD/USD pair should avoid sub-$0.6650 and the Second Major Support Level (S2) at $0.6639.

The Third Major Support Level (S3) sits at $0.6575.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The AUD/USD sits above the 100-day EMA, currently at $0.670040. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above the 100-day EMA (0.67040) would support a breakout from R1 ($0.6741) to give the bulls a run at the 200-day EMA ($0.67620) and R2 ($0.6768). However, a fall through the 100-day EMA ($0.67040) would bring S1 ($0.6677) and the 50-day EMA ($0.66761) into play. A fall through the 50-day EMA would send a bearish signal.

NZD/USD Price Action

This morning, the Kiwi was up 0.04% to $0.62477. A mixed morning saw the NZD/USD fall to an early low of $0.62432 before finding support.

Technical Indicators

The NZD/USD needs to move through the $0.6252 pivot to target the First Major Resistance Level (R1) at $0.6275 and the Monday high of $0.62813. 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 the Second Major Resistance Level (R2) at $0.6304. The Third Major Resistance Level (R3) sits at $0.6357.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6222 in play. However, barring a risk-off-fueled sell-off, the NZD/USD pair would likely avoid sub-$0.62 and the Second Major Support Level (S2) at $0.6199.

The Third Major Support Level (S3) sits at $0.6147.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The NZD/USD sits above the 200-day EMA, currently at $0.62406. The 50-day converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A bullish cross of the 50-day EMA through the 100-day EMA would support a breakout from R1 ($0.6275) to bring R2 (0.6304) into play. However, a fall through the 200-day EMA ($0.62406) would give the bears a run at S1 ($0.6222) and the 100-day ($0.62109) and 50-day ($0.62097) EMAs. A fall through the 50-day EMA would send a bearish signal.