AUD/USD and NZD/USD Fundamental Analysis: US CPI and the Fed

It is a quiet morning for the AUD/USD and the NZD/USD. Electronic card retail sales figures from New Zealand drew interest this morning.

Retail spending increased by 0.7% in March, reversing a 0.1% decline from February. However, economists forecast a 1.5% rise.

According to NZ Stats,

• Spending in core retail industries increased by 0.5%.
• Motor vehicle (excl. fuel) spending jumped by 5.5%, with spending on fuel rising by 1.3%.
• Spending on apparel rose by 1.5% and durables by 0.2%.
• However, spending on consumables declined by 1.2%.

While the increase in spending delivered Kiwi dollar support, the upside was modest. Investors will turn their attention to the US CPI Report and FOMC Meeting Minutes that could cement a 25-basis point Fed interest rate hike in May.

Later this morning, RBA Deputy Governor Michele Bullock will speak. Hawkish commentary would deliver an AUD/USD boost. Last week, RBA Governor Philip Lowe warned the markets that hitting the pause button did not translate into the end of policy tightening.

AUD/USD Price Action

The Aussie was down 0.02% to $0.66516. A mixed start to the day saw the AUD/USD fall to an early low of $0.66477 before rising to a high of $0.66543.

Technical Indicators

The AUD/USD needs to move through the $0.6656 pivot to target the First Major Resistance Level (R1) at $0.6677 and the Tuesday high of $0.66797. A return to $0.6670 would signal a bullish session. However, the Aussie Dollar would need hawkish RBA chatter and the US CPI Report to support a breakout day.

In the case of another breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6701. The Third Major Resistance Level (R3) sits at $0.6747.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6631 in play. However, barring a risk-off-fueled sell-off, the AUD/USD pair should avoid sub-$0.66. The Second Major Support Level (S2) at $0.6610 should limit the downside.

The Third Major Support Level (S3) sits at $0.6564.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The AUD/USD sits below the 50-day EMA, currently at $0.66797. The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through the R1 ($0.6677) and 50-day EMA ($0.66797) would support a breakout from the 100-day EMA ($0.66882) to target R2 ($0.6701). However, failure to move through 50-day ($0.66797) EMAs would leave S1 ($0.6631) in play. A move through the 50-day EMA would send a bullish signal.

NZD/USD Price Action

This morning, the Kiwi was up 0.13% to $0.61930. A mixed start to the day saw the NZD/USD fall to an early low of $0.61829 before rising to a high of $0.61951.

Technical Indicators

The NZD/USD needs to move through the $0.6201 pivot to target the First Major Resistance Level (R1) at $0.6218. A return to $0.62 would signal a bullish session. However, the US CPI Report would need to support a breakout.

In the case of a breakout session, the Kiwi would likely test resistance at the Tuesday high of $0.62338 but fall short of the Second Major Resistance Level (R2) at $0.6251. The Third Major Resistance Level (R3) sits at $0.6300.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6168 in play. However, barring a risk-off-fueled sell-off, the NZD/USD pair would likely avoid sub-$0.6150. The Second Major Support Level (S2) at $0.6151 should limit the downside.

The Third Major Support Level (S3) sits at $0.6102.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The NZD/USD sits below the 100-day EMA, currently at $0.62411. The 50-day narrowed to the 200-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($0.6218) would bring the Tuesday high of $0.62338 and the EMAs into view. However, failure to move through the EMAs would leave S1 ($0.6168) in play. A move through the 50-day EMA ($0.62429) would send a bullish signal.