Rising Wedge Breakout Looms for Aussie Kiwi

AUD/NZD ANALYSIS & TALKING POINTS

• Australian economic data in favor of RBA statement could push AUD higher.
• Can the 200-day MA hold?

AUSTRALIAN/NEW ZEALAND DOLLAR FUNDAMENTAL BACKDROP

AUD/NZD bulls have enjoyed some upside support since mid-December as the U.S. exhibited disinflation giving risk on assets like the AUD and NZD more favor. The AUD garnered more backing with its close ties to China by way of commodity exports due to lesser COVID restrictions and a fiscal backing by the Chinese government to promote growth. More recently, the RBA expressed concern over sticky inflation within the Australian economy leading to hawkish remarks inciting the need for additional interest rate hikes to come.

With not much in the way of high impact New Zealand data (see economic calendar below), the focus will be on Australian centric information as well as U.S. releases that could alter global risk sentiment.

AUD/NZD ECONOMIC CALENDAR

Source: DailyFX economic calendar

TECHNICAL ANALYSIS

AUD/NZD DAILY CHART

Chart prepared by Warren Venketas, IG

Daily AUD/NZD price action shows the pair trading within a rising wedge chart formation (black). Traditionally, the rising wedge appears via a preceding downtrend but not in the case above. Price is currently crammed in between two key areas and could breakout in either direction. A candle close below or above these regions will likely trigger a larger move. From a bullish perspective, a close above the 200-day SMA (blue) coinciding with the 1.1000 psychological handle may extend the move towards the recent swing high at 1.1045. While bears will be eyeing a wedge break lower coinciding with swing support at 1.0940 exposing 1.0879.

Key resistance levels:

• 0.7063
• 0.7000

Key support levels:

• 0.6916
• 0.6900

Contact and followWarrenon Twitter:@WVenketas