At 1.0735, AUD/NZD is flat on the session so far although it has moved between a low of 1.0719 and 1.0739  as the bulls step in to try and hold the price from sliding below the hourly structure. The pair has otherwise been gliding along an ascending trendline that had been established at the start of December 2021 as the Australian dollar finds support on central bank sentiment.

The Reserve Bank of Australia has been pushing back on the global push for rate hikes near term, but the markets expect that to change considering the prospects for higher global inflation risks. Moreover, the domestic labour market is hotting up. ''The sharp drop in preference-based underemployment underscores how tight the labour market is,'' analysts at TD Securities explained.

Meanwhile, the Reserve Bank of New Zealand’s inflation expectations survey will be a key event for Asia today and it could post a 30-year high, analysts at Westpac explained.  ''That could motivate markets to price even more into rates and the NZD, even though pricing is already quite full.''

''Multi-month, though, we continue to expect the USD to benefit from the Fed’s looming tightening cycle until around mid-2022. That should at least slow any NZD rallies, and could even cause a final dip to below 0.6500. The latter scenario could be a medium-term buying opportunity.''

The 4-hour chart above shows the price hugging the ascending trendline support. While there are prospects of higher highs to come, 1.08 could be the limit when taking into account the daily resistance at 1.08162. But before moving ahead with higher highs on the interday time frames, there is strong divergence formed in the intraday charts. This will compel the AUDNZD market to outperform bulls by bears taking over for the short term projections. 

INTERDAY BULLISH DIVERGENCE ON AUDNZD

farhan fazal

Feb 16 2022