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

It is a busy day ahead for the AUD/USD, with the RBA delivering its first monetary policy decision of the second quarter.

Despite weaker-than-expected economic indicators and softer inflation in February, economists forecast the RBA to lift interest rates by 25 basis points to 3.85%.

According to the previous RBA meeting minutes, members agreed to consider pausing interest rates at the April meeting. A surprise hold on interest rates would weigh on the AUD/USD, with economic indicators from China reflecting the macroeconomic environment, another consideration for the RBA. In March, the Caixin Manufacturing PMI fell from 51.6 to 50.0, weighed by weak export demand.

Earlier this morning, the NZD/USD was in action, with business confidence in focus. In Q1, the NZIER Business Confidence Index

According to the NZIER,

• A net 61% of businesses expect a deterioration in economic conditions over the coming months versus 70% in Q4.
• Demand weakened more broadly, with sales as the primary constraint for businesses.
• 41% of firms now report sales as the primary constraint, while 29% report finding labor as their primary constraint.
• Labor shortages eased in Q1.
• While the percentage of businesses reporting higher costs fell sharply in Q1, the number of firms increasing their prices rose in the quarter.

Later today, US economic indicators will also provide direction, with JOLTs job openings in focus ahead of ADP nonfarm employment change numbers on Wednesday and the US Jobs Report on Friday. Factory orders are also out but should have a limited impact on the pairings, barring a marked decline.

Investors should also monitor central bank chatter throughout the day as investors consider the RBNZ monetary policy decision on Wednesday.

AUD/USD Price Action

The Aussie was up 0.05% to $0.67885. A mixed start to the day saw the AUD/USD fall to an early low of $0.67728 before rising to a high of $0.67891.

Technical Indicators

The AUD/USD needs to avoid the $0.6742 pivot to target the First Major Resistance Level (R1) at $0.6833. A move through the Monday high of $0.6790 would signal a bullish session. However, the Aussie Dollar would need the RBA to support a pre-US session breakout day.

In the case of another breakout session, the Aussie would likely test resistance at $0.6850 but fall short of the Second Major Resistance Level (R2) at $0.6881. The Third Major Resistance Level (R3) sits at $0.7020.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6694 into play. However, barring an RBA-fueled sell-off, the AUD/USD pair should avoid sub-$0.6690 and the Second Major Support Level (S2) at $0.6603.

The Third Major Support Level (S3) sits at $0.6464.

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The AUD/USD sits above the 200-day EMA, currently at $0.67302. The 50-day EMA crossed through the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above the 200-day EMA ($0.67302) would support a breakout from R1 ($0.6833) to target R2 ($0.6881). However, a fall through the 200-day EMA ($0.67302) would bring the 50-day (0.66988) and 100-day (0.66974) EMAs and ($0.6694) 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 $0.63012. A mixed start to the day saw the NZD/USD fall to an early low of $0.62889 before rising to a high of $0.63028.

Technical Indicators

The NZD/USD needs to avoid the $0.6268 pivot to target the First Major Resistance Level (R1) at $0.6328. A move through the morning high of $0.63028 would signal a bullish session. However, market risk sentiment needs to be bullish to support a breakout.

In the case of another breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.6360. The Third Major Resistance Level (R3) sits at $0.6452.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6235 into 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 $0.6176.

The Third Major Support Level (S3) sits at $0.6083.

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The NZD/USD sits above the 50-day EMA, currently at $0.62520. The 50-day pulled away from the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above the 50-day ($0.62420) and 200-day ($0.62385) EMAs would support a breakout from R1 ($0.6328) to target R2 ($0.6360). However, a fall through the 50-day ($0.62420) and 200-day ($0.62385) EMAs would bring S1 ($0.6235) and the 100-day EMA ($0.62306) into view. A fall through the 50-day EMA would send a bearish signal.