AUD/USD and NZD/USD Fundamental Analysis: RBA Talks Rate Pause

It is a quiet Asian session for the AUD/USD and the NZD/USD. There are no material stats for investors to consider this morning. While there are no economic indicators, RBA Governor Philip Lowe delivered further Aussie dollar weakness at the turn of the day.

Lowe delivered an unexpectedly dovish tone, raising the possibility of pausing interest rate hikes.

Addressing the Australian Financial Review’s Business Summit, Lowe echoed the RBA Rate Statement, stating that the Bank was closely watching economic indicators while mindful of the impact of interest rate hikes and elevated inflation on households.

Regarding pausing rate hikes, Lowe reportedly said,

“With monetary policy in restrictive territory, we are closer to the point where it will be appropriate to pause interest rates to allow more time to assess the state of the economy. At what point it will be appropriate to pause will be determined by the data and our assessment of the outlook.”

With no stats from China to consider ahead of inflation numbers tomorrow, Fed Chair Powell’s hawkish testimony will likely cap a meaningful clawback of the Tuesday sell-off.

AUD/USD Price Action

The Aussie was up 0.04% to $0.65858 this morning. A mixed start to the day saw the AUD/USD fall to a low of $0.65807 before rising to a high of $0.65880.

Technical Indicators

The AUD/USD needs to move through the $0.6637 pivot to target the First Major Resistance Level (R1) at $0.6694. A return to $0.66 would signal a bullish session. However, the Aussie Dollar would need dire labor market numbers from the US to support another breakout session.

In case of a breakout session, the Aussie would likely test resistance at $0.67 but fall short of the Second Major Resistance Level (R2) at $0.6805. The Third Major Resistance Level (R3) sits at $0.6973.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6526 in play. However, barring another solid set of US labor market numbers, the AUD/USD pair should avoid sub-$0.65 and the Second Major Support Level (S2) at $0.6469.

The Third Major Support Level (S3) sits at $0.6301.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The AUD/USD sits below the 50-day EMA, currently at $0.67375. The 50-day EMA slid back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($0.6694) would give the bulls a run at the 50-day EMA ($0.67375). However, failure to move through the 50-day EMA ($0.67375) would leave the Major Support Levels in play. A move through the 50-day EMA would send a bullish signal.

NZD/USD Price Action

This morning, the Kiwi was up 0.02% to $0.61079. A mixed start to the day saw the NZD/USD fall to an early low of $0.61025 before rising to a high of $0.61094.

Technical Indicators

The NZD/USD needs to move through the $0.6144 pivot to target the First Major Resistance Level (R1) at $0.6184. A return to $0.6150 would signal a recovery session. However, the Kiwi would need Fed Chair Powell and US labor market numbers to support a breakout session.

In the case of a breakout session, the Kiwi would likely test resistance at $0.62 but fall short of the Second Major Resistance Level (R2) at $0.6263. The Third Major Resistance Level (R3) sits at $0.6381.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6066 in play. However, barring a Fed Chair Powell and US labor market data-fueled sell-off, the NZD/USD pair would likely avoid sub-$0.6050 and the Second Major Support Level (S2) at $0.6025.

The Third Major Support Level (S3) sits at $0.5906.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The NZD/USD sits below the 50-day EMA, currently at $0.62015. The 50-day fell back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

An NZD/USD move through R1 ($0.6184) would give the bulls a run at the 50-day EMA ($0.62015). A move through the 50-day EMA would send a bullish signal. However, failure to breakout from the 50-day EMA ($0.62015) would leave S1 ($0.6066) in play.