The RBNZ saw a mild rally today, but can the resistance channel on AUD/NZD hold?
Although the central bank raised interest rates by 0.25% as expected, policymakers actually considered keeping policy unchanged at this meeting.
As it turns out, weak business demand conditions and slowing global inflationary pressures have led some to rethink their tightening plans.
Not surprisingly, this led to a sharp drop in the price of the New Zealand dollar across the board. But how long will the sell-off last?
AUD/NZD for one hour Planned by TV
On the hourly chart of the AUD/NZD, you can see that the pair has formed lower highs and lower lows connected to a downward channel that has been holding throughout the month of May.
Thanks to the RBNZ’s surprise, the price is now approaching the top of its channel, which happens to line up with R1 (1.0710).
Technical indicators are still pointing to a continuation of the slide, as the 100 SMA is below the 200 SMA to indicate bearish pressure.
Stochastic is moving higher but is approaching the overbought area to reflect exhaustion among the buyers soon. A shift lower would confirm that the AUD bulls may take control and pull AUD/NZD back to the channel support near S1 (1.0530).
Now this pair is moving At a rate of 70 points per dayso it may not pass the top of the channel before the kiwi sellers book their profits.
I would be wary if AUD/NZD crosses a slight psychological barrier at 1.0750, as this could pave the way for a move up to R2 (1.0830) or higher!
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