AUD/NZD Sellers Dominate Amid Key Breakdowns

Market Overview

The Australian and New Zealand dollars faced downward pressure on Monday as rising U.S. Treasury yields reinforced demand for the greenback. Markets are weighing the potential for accommodative U.S. monetary policies post-Federal Reserve’s upcoming decision. Meanwhile, mixed Chinese data provided little relief for the antipodean currencies, leaving both vulnerable to external factors.

Technical Analysis

On the 4-hour chart, AUD/NZD has entered a bearish phase after sellers decisively broke through the critical support at 1.10232. This move completed a double-top pattern, a clear bearish reversal signal. The break of this key level has shifted market control firmly to the sellers, paving the way for potential declines toward 1.10088, the next key support. A continuation of the downward trajectory could push prices further to 1.10017 and eventually to 1.09884.

Oscillators Confirmations

Momentum indicators corroborate this bearish sentiment. The Relative Strength Index (RSI) remains firmly in negative territory, reflecting consistent selling pressure. Similarly, the Moving Average Convergence Divergence (MACD) has crossed into bearish alignment, signaling the possibility of sustained downside movement. The mixed moving averages indicate a cautious market outlook, with short-term bearish momentum overshadowing any immediate recovery.

Alternative Scenario

However, a counter-scenario emerges if buyers regain strength and reclaim the lost support at 1.10232. In this event, resistance levels at 1.10365 and 1.10580 come into play. A break above these levels would invalidate the double-top structure and could spark a bullish recovery, reversing the current downtrend.

Key Levels

• Resistance Levels: 1.10232, 1.10365, 1.10580
• Support Levels: 1.10088, 1.10017, 1.09884

Key Events to Watch

While this week’s economic calendar for Oceania is sparse, significant fiscal updates from both Australia and New Zealand could influence the pair’s movement. On Wednesday, the Australian government is set to release its updated budget projections, expected to reveal larger deficits, partly due to China’s economic slowdown—Australia’s largest trading partner. Meanwhile, New Zealand’s government will issue its six-month financial update on Tuesday, with GDP data for Q3 due Thursday. Expectations point toward a contraction, adding further pressure on the kiwi.

Conclusion

AUD/NZD remains under seller control following the break below 1.10232, targeting lower support levels. A bullish recovery hinges on reclaiming this critical threshold and overcoming key resistances, while fiscal developments in both Australia and New Zealand will shape mid-week volatility.

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