AUD/NZD broke a major support level this week!
In case you missed it, the New Zealand dollar was one of the weakest currencies last week after a slower-than-expected CPI report encouraged speculation the RBNZ is following its peers by ending the cycle of rate hikes as well.
The Australian dollar, which also took hits from risk aversion, Still I managed to earn points though NZD. In fact, the AUD/NZD traded above the trend line support for most of the week.
AUD/NZD 1 hour forex chart by TradingView
But that was last week.
Not only has the AUD/NZD broken trend line support since then, but it is also currently trading below the 100 and 200 SMAs on the hourly chart.
Are we looking at a legitimate passive hack?
It could be that traders are pricing in lower inflation numbers than Australia.
Look, markets expect the report to reflect a further slowdown in quarterly and annualized consumer prices in the first quarter.
If we see a slower CPI, there will be fewer reasons for the RBA to go back to its rate hike ways.
If the CPI slows down, you can sell AUD/NZD to the psychological level of 1.0800 or the inflection point of 1.0790.
If you think the AUD/NZD breakout is legit, but the Aussie will see more buying before fresh weekly lows, you can consider selling on pullbacks after the breakout.
I am looking at 1.0870 Pivot Point and 100 SMA as it is also close to the broken trendline support, but I would not rule out some selling at the minor psychological level of 1.0850.