AUD/USD and NZD/USD Fundamental Analysis: US Debt Ceiling Deal in Focus

It is a quiet Monday session for the AUD/USD and the NZD/USD. There are no economic indicators from Australia, New Zealand, or China to draw investor interest.

The lack of stats will leave investors to respond further to US inflation numbers from Friday. In April, the Core PCE Price Index increased by 4.7% year-over-year versus 4.6% in March.

The markets responded to the pickup in inflationary pressure and better-than-expected personal spending, core durable goods orders, and Michigan Consumer Sentiment numbers. According to the CME FedWatch Tool, the probability of a June 25-basis point Fed interest rate hike stood at 64.2%, up from 17.4% one week early.

While the hawkish Fed policy outlook will weigh, reports of US President Joe Biden and Speaker of the House Kevin McCarthy reaching a debt ceiling deal should provide support.

Looking ahead to the US session, it is a quiet day on the US economic calendar. The US markets are closed for Memorial Day, leaving Fed chatter with the media to provide direction.

AUD/USD Technical Indicators

Resistance & Support Levels

The AUD/USD needs to move through the $0.6517 pivot to target the First Major Resistance Level (R1) at $0.6544 and the Friday high of $0.65442. A return to $0.6540 would signal a bullish session. However, economic indicators and the debt ceiling news must support a breakout.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6571. The Third Major Resistance Level (R3) sits at $0.6625.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6490 in play. However, barring another risk-off-fueled sell-off, the AUD/USD pair should avoid sub $0.6450. The Second Major Support Level (S2) at $0.6463 should limit the downside.

The Third Major Support Level (S3) sits at $0.6410.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bearish signals. The AUD/USD sits below the 50-day EMA, currently at $0.65936. 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.

An AUD/USD move through R1 ($0.6544) would give the bulls a run at R2 ($0.6571) and the 50-day EMA ($0.65936). However, failure to move through the 50-day EMA ($0.65936) would leave S1 ($0.6490) in view. An AUD/USD move through the 50-day EMA would send a bullish signal.

NZD/USD Technical Indicators

Resistance & Support Levels

The NZD/USD has to move through the $0.6058 pivot to target the First Major Resistance Level (R1) at $0.6083 and the Friday high of $0.60964. A return to $0.6075 would signal a bullish session. However, the US debt ceiling news must support a session breakout.

In the case of a breakout session, the Kiwi would likely test resistance at the Second Major Resistance Level (R2) at $0.6121. The Third Major Resistance Level (R3) sits at $0.6185.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6019 in play. However, barring a risk-off fueled sell-off, the NZD/USD should steer clear of sub-$0.60 and the Second Major Support Level (S2) at $0.5995.

The Third Major Support Level (S3) sits at $0.5931.

Looking at the EMAs and the 4-hourly chart, the EMAs were bearish. The NZD/USD sits below the 50-day EMA, currently at $0.61722. 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.

An NZD/USD move through R1 ($0.6083) would give the bulls a run at R2 ($0.6121) and the 50-day EMA ($0.61722). However, failure to move through the 50-day EMA ($0.61722) would leave S1 ($0.6019) in view. A move through the 50-day EMA would send a bullish signal.