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

It is a relatively busy morning for the AUD/USD and NZD/USD. Business PMI and inflation expectation numbers will provide the Kiwi with the direction this morning. While the Business PMI will draw interest, the inflation expectation figures should have more impact. Economists forecast inflation to soften from 3.3% to 3.0% in Q2.

Westpac Consumer Confidence figures for May will guide the Aussie. However, the timing of the survey will need consideration after the RBA surprised the markets with a 25-basis point interest rate hike on May 2. In April, the Consumer Sentiment Index increased by 9.4% to 85.8, with the RBA’s April decision to hit the pause button supporting the jump.

Later today, prelim Michigan Consumer Sentiment and Expectation figures for May will draw interest. A marked fall in consumer sentiment would fuel recessionary fears. Economists forecast the Michigan Consumer Sentiment Index to fall from 63.5 to 63.0.

However, FOMC member commentary, the banking sector crisis, and the US debt ceiling will also need monitoring.

AUD/USD Price Action

This morning, the AUD/USD was down 0.01% to $0.67011. A mixed start to the day saw the AUD/USD fall to an early low of $0.66990 before rising to a high of $0.67029.

Technical Indicators

Resistance & Support Levels

The AUD/USD needs to move through the $0.6729 pivot to target the First Major Resistance Level (R1) at $0.6769. A return to $0.6750 would signal a rebound from Thursday. However, the Aussie would need economic indicators from Australia and US politics to support a breakout.

In case of a breakout session, the Aussie would likely test resistance at $0.68 but fall short of the Second Major Resistance Level (R2) at $0.6836. The Third Major Resistance Level (R3) sits at $0.6944.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6662 in play. However, barring a risk-off-fueled sell-off, the AUD/USD pair should avoid sub $0.6650 and the Second Major Support Level (S2) at $0.6622.

The Third Major Support Level (S3) sits at $0.6514.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bearish signals. The AUD/USD sits below the 200-day EMA, currently at $0.67062. The 50-day EMA narrowed to the 100-day EMA, with the 100-day EMA converging on the 200-day EMA, delivering bearish signals.

A move through the 200-day ($0.62062) and 100-day ($0.67087) EMAs would support a breakout from the 50-day EMA ($0.67264) to target R1 ($0.6769). However, failure to move through the 200-day EMA ($0.67062) would leave S1 ($0.6662) in view. A move through the 50-day EMA would be a bullish signal.

NZD/USD Price Action

This morning, the NZD/USD was up 0.04% to $0.63003. A mixed start to the day saw the NZD/USD fall to an early low of $0.62948 before rising to a high of $0.63003.

Technical Indicators

Resistance & Support Levels

The NZD/USD has to move through the $0.6324 pivot to target the First Major Resistance Level (R1) at $0.6358. A return to $0.6350 would signal a bullish session. However, the economic indicators from New Zealand and US politics must support a session breakout.

In the case of a breakout session, the Kiwi would likely test resistance at the Thursday high of $0.63845 but fall short of the Second Major Resistance Level (R2) at $0.6419. The Third Major Resistance Level (R3) sits at $0.6515.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6263 in play. However, barring another sell-off, the NZD/USD should steer clear of sub-$0.6250 and the Second Major Support Level (S2) at $0.6228.

The Third Major Support Level (S3) sits at $0.6133.

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 $0.62937. 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 50-day EMA ($0.62937) would support a breakout from R1 ($0.6358) to target the Thursday high of $0.63845. However, a fall through the 50-day EMA ($0.62937) would bring S1 ($0.6263) and the 100-day EMA ($0.62586) into play. A fall through the 50-day EMA would send a bearish signal.