The AUDNZD has started to retreat after the RBA left interest rates on hold. The bullish run on the AUDNZD could be limited after the recent hawkish RBNZ rate hike brings markets back to reality.
Earlier today the RBA said that higher rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so.
The central bank added “In light of this and the uncertainty surrounding the economic outlook, the RBA decided to hold interest rates steady this month.”
The emerging policy divergence developing between the Reserve Bank of Australia and the Reserve Bank of New Zealand will weigh near-term bulls eventually as Australia could be moving away from hikes.
Furthermore, Australia’s recent positive economic data could limit the losses in the pair from a technical perspective. The RBA pivoting on its monetary policy tightening is a neutralizer for AUDNZD bulls.
Technically, a break below the 1.0800 level could reinforce the bearish outlook on the pair in the near term, a turbo charges a move towards the 1.07000 region, although this scenario does seem far-fetched at present.
The ActivTrader Sentiment tool suggests that 44% of retail traders are bearish on the AUD. Technically retail traders could be pricing in on a near-term price retracement.
The RBA monetary policy pivot could also underpin the current sentiment as markets price in a dovish outlook for the pair in the near term.
Also, the majority tend to be on the wrong side of the trade, especially with this type of large sentiment margin.
4-Hour Chart Analysis
The AUDNZD managed to recover gains from the 1.0800, a previous support-turned-resistance. The short-term trend is dominated by bulls in the near term above this level.
However, a failure to trade above a 1.0800 barrier, could soon trigger selling pressure on the pair back below the 1.0700 level. A break below the 1.0700 level could reinforce a bearish outlook and the near-term target will be at the 1.0650 level.
Daily Chart Analysis
The AUDNZD pair has formed a bullish double-bottom price pattern, this is further amplifying the bulls case right now, despite the negative outlook under the Cloud.
However, a break above the 1.1000 level could trigger buying pressure towards the 1.1200 level. A hold above the 1.0800 support level could give bulls the reinforcement needed to break above the 1.1000 near-term resistance.
