The Australian Dollar (AUD) extended upside movement against the New Zealand Dollar (NZD) on Monday, increasing the price of AUDNZD to more than 1.0630 as bulls gain strength. The technical bias remains bullish because of a higher low in the recent downside move.
As of this writing, the pair is being traded around 1.0644. A hurdle can be seen around 1.0744, the horizontal resistance area ahead of 1.0764, the swing high of the last major upside rally as demonstrated in the given below daily chart. A break and daily closing above the 1.0764 resistance shall incite renewed buying interest, validating a move towards the 1.1000 milestone in medium term.
On the downside, the pair is likely to find a support around 1.0586, the horizontal support area ahead of 1.0509, the intraday low of Friday and then 1.0363, the swing low of the last major downside move. The technical bias shall remain bullish as long as the 1.0363 support area is intact.
It is pertinent to mention here that increased selling pressure is being noted in the value of New Zealand Dollar after a rate cut by the Reserve Bank of New Zealand (RBNZ) last week. New Zealand’s economy is among the fastest growing in the developed world, building pressure on inflation which has languished below the RBNZ’s 1-3 percent target band for two years. RBNZ head Wheeler has cut borrowing costs seven times since June 2015 in an effort to stoke price increases by boosting domestic demand, and to contain the strong local currency.
Considering the overall technical and fundamental outlook, buying the pair on dips appears to be a good strategy in short to medium term.