By ForexTime
A central bank mashup featuring the Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) could trigger a significant move in the AUDNZD this week.
Since late June 2023, the currency pair has been trapped within a wide range on the daily charts with support around 1.0720 and resistance at 1.0920. However, the breakdown below key support this morning could be an early indication that a significant move may be on the horizon.
But before we unpack how these antipodean central bank decisions could influence the AUDNZD, it is worth keeping in mind that the aussie has weakened against most G10 currencies year-to-date.
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A similar theme was seen in the New Zealand dollar which depreciated across the G10 space.
Taking a brief look at the technical picture, prices remain trapped within a range on the weekly charts with key support at 1.0580 and resistance at 1.1050.
The RBA’s first meeting under new Governor Michele Bullock is widely expected to conclude with interest rates left unchanged at 4.1%.
However, traders are still pricing in a 52 % probability of a 25-basis point hike by the end of 2023. Given how economic data since September has been mixed, investors will be paying very close attention to what the new RBA governor has to say.
Markets expect the RBNZ to keep its benchmark rate unchanged at 5.5% this week.
Although economic growth has surprised to the upside, confidence has been hit by rising oil prices. The threat of rising inflationary pressures may force the central bank to maintain a hawkish stance with traders currently pricing in a 58% of a 25-basis point rate hike by the end of 2023.
After swinging within a wide range since late June, the AUDNZD experienced a breakdown this morning as prices cut below the 1.0720 support.
Prices are trading below the 50, 100, and 200 day SMA but the Relative Strength Index (RSI) is flirting near oversold territory.
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