AUD/USD and NZD/USD Fundamental Analysis: Risk On

It was a quiet morning for the AUD/USD and the NZD/USD pairs. There were no economic indicators from Australia or New Zealand to provide direction.

The lack of stats leaves investors to reconsider the latest round of economic indicators and the Fed’s next policy move. While the markets lay bets on a 25-basis point Fed interest rate hike, there is also the fear of another financial crisis for investors to tackle.

On Thursday, the US equity markets made ground as investor fears of a 2008 repeat receded. Governments and central banks are unlikely to allow another big bank to collapse, which supported commodities and the AUD/USD and NZD/USD pairs on Thursday.

For the bulls, the talk of another 50-basis point Fed rate hike should be off the table. Following the collapse of Silicon Valley Bank and Signature Bank, the doves should have enough voice to push through a 25-basis point hike. There may also be enough justification to take the foot off the gas and assess the damage.

Later today, Michigan Consumer Sentiment numbers for March will draw interest. While we expect market sensitivity to the numbers and sub-components, the Fed should avoid a return to 50-basis point territory.

AUD/USD Price Action

The Aussie was up 0.01% to $0.66560. A mixed start to the day saw the AUD/USD fall to an early low of $0.66437 before rising to a high of $0.66660.

Technical Indicators

The AUD/USD needs to avoid the $0.6644 pivot to target the First Major Resistance Level (R1) at $0.6680. A move through the Thursday high of $0.66682 would signal a bullish session. However, the Aussie Dollar would need a further shift in market risk sentiment to support a breakout day.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6705. The Third Major Resistance Level (R3) sits at $0.6766.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6619 into play. However, barring another risk-off-fueled sell-off, the AUD/USD pair should avoid sub-$0.66 and the Second Major Support Level (S2) at $0.6582.

The Third Major Support Level (S3) sits at $0.6521.

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 $0.66585. The 50-day EMA slipped back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA (0.66585) would support a breakout from R1 ($0.6680) to give the bulls a run at the 100-day EMA ($0.67039) and R2 ($0.6705). However, failure to move through the 50-day EMA ($0.66585) 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 down 0.01% to $0.61942. A mixed start to the day saw the NZD/USD fall to an early low of $0.61825 before rising to a high of $0.62055.

Technical Indicators

The NZD/USD needs to avoid the $0.6177 pivot to target the First Major Resistance Level (R1) at $0.6214. A return to $0.62 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 $0.6234 and resistance at $0.6250. The Third Major Resistance Level (R3) sits at $0.6290.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6158 into play. However, barring a risk-off-fueled sell-off, the NZD/USD pair would likely avoid sub-$0.61. The Second Major Support Level (S2) at $0.6121 should limit the downside.

The Third Major Support Level (S3) sits at $0.6064.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The NZD/USD sits below the 100-day EMA, currently at $0.62000. The 50-day narrowed to the 100-day EMA, with the 100-day EMA moving toward the 200-day EMA, delivering bullish signals.

An NZD/USD move through the 100-day EMA ($0.62000) would support a breakout from R1 ($0.6214) to target R2 ($0.6234) and the 200-day EMA ($0.62393). However, a fall through the 50-day EMA ($0.61841) would bring S1 ($0.6158) into play. A fall through the 50-day EMA would send a bearish signal.