AUD/USD and NZD/USD Fundamental Analysis: US CPI Report in Focus

It is a relatively busy morning for the AUD/USD. Following the disappointing Australian NAB Business Confidence numbers, consumer confidence will be in focus this morning.

The numbers for May will give the markets and the RBA an idea of what to expect from consumer spending near-term. Easing inflationary pressures, a pickup in wage growth, and declining mortgage rates should support a pickup in consumer confidence.

However, the RBA has pushed cash rates to 3.85%, which may test consumers’ willingness to open the purse strings. Economists forecast the Westpac Consumer Confidence Index to fall by 1.7% to 82.1. In April, the Westpac Consumer Confidence Index stood at 85.8.

For the NZD/USD, there are no economic indicators from New Zealand or China to consider, leaving market risk sentiment to provide direction ahead of the US session.

Later today, the US CPI Report will be the main report of the week. Sticky inflation would support another Fed interest rate hike and fuel recessionary jitters. Economists forecast the US core annual inflation rate to soften from 5.6% to 5.5% and for the headline inflation rate to hold steady at 5.0%.

AUD/USD Price Action

This morning, the AUD/USD was up 0.03% to $0.67640. A mixed start to the day saw the AUD/USD fall to an early low of $0.67566 before rising to a high of $0.67645.

Technical Indicators

Resistance & Support Levels

The AUD/USD needs to move through the $0.67650 pivot to target the First Major Resistance Level (R1) at $0.67840 and the Tuesday high of $0.67868. A return to $0.6780 would signal a bullish session. However, the Aussie would need economic indicators from Australia and the US CPI Report to support a session breakout.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6805. The Third Major Resistance Level (R3) sits at $0.6846.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6743 in play. However, barring a US CPI Report-fueled sell-off, the AUD/USD pair should avoid the Second Major Support Level (S2) at $0.6725.

The Third Major Support Level (S3) sits at $0.6684.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bullish signals. The AUD/USD sits above the 50-day EMA, currently at $0.67138. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA converging on the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($0.67138) would support a breakout from R1 ($0.6784) to target R2 ($0.6805). However, a fall through S1 ($0.6743) would bring S2 ($0.6725) and the 50-day ($0.67138) into view. A fall through the 50-day EMA would be a bearish signal.

NZD/USD Price Action

This morning, the NZD/USD was up 0.05% to $0.63380. A mixed start to the day saw the NZD/USD fall to an early low of $0.63276 before rising to a high of $0.63389.

Technical Indicators

Resistance & Support Levels

The NZD/USD has to avoid the $0.6334 pivot to target the First Major Resistance Level (R1) at $0.6350. A move through the Tuesday high of $0.63489 would signal a bullish session. However, the economic indicators from the US must support a session breakout.

In the case of a breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.6365. The Third Major Resistance Level (R3) sits at $0.6395.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6319 into play. However, barring a US CPI Report-fueled sell-off, the NZD/USD should steer clear of the Second Major Support Level (S2) at $0.6303.

The Third Major Support Level (S3) sits at $0.6273.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bullish signals. The NZD/USD sits above the 50-day EMA, currently at $0.62652. The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($0.62652) would support a breakout from R1 ($0.6350) to target R2 ($0.6365). However, a fall through S1 ($0.6319) would bring S2 ($0.6303) into play. A fall through the 50-day EMA (0.62652) would signal a near-term bullish trend reversal.