AUD/NZD Targets: Selling Pressure Intensifies

Market Overview

On Tuesday, the Australian and New Zealand dollars showed brief stabilization after both currencies recently reached multi-year lows against the US dollar. This respite followed closely scrutinized inflation data from the United States, which continues to weigh heavily on risk sentiment. Despite the short-lived stabilization, risks for both currencies remain skewed to the downside amid expectations of persistent monetary tightening in the US.

Technical Analysis

The AUD/NZD pair has come under heightened selling pressure, breaking below the key support level at 1.10449 following a period of range-bound trading. Sellers are now focused on keeping the pair below the 127.2% Fibonacci extension of the last bullish swing, positioned at 1.10342. Should this downward momentum persist, the next immediate support levels are anticipated at 1.10206 and 1.10056. A sustained breach of these levels would further confirm the bearish trend, potentially exposing the pair to deeper declines.

Momentum indicators reinforce this bearish outlook. The Relative Strength Index (RSI) continues to hover in bearish territory, signaling dominant selling activity. Similarly, the Moving Average Convergence Divergence (MACD) indicates negative momentum, with a widening gap between the signal and MACD lines pointing to sustained selling interest. Meanwhile, the moving averages present a mixed configuration, reflecting short-term indecision amidst broader downward pressure.

However, buyers could invalidate the bearish scenario if they regain control and successfully push the price above the resistance at 1.10842, which marks the upper boundary of the recent trading range. Such a move would signal renewed bullish momentum and open the path toward higher resistance levels.

Fundamental Perspective

Domestic data released on Tuesday highlighted a decline in Australian consumer sentiment in January. This drop signals potential weakness in household spending, adding to the case for a February rate cut by the Reserve Bank of Australia (RBA). Market swaps now reflect a 67% probability of a 25-basis-point rate reduction, with a full rate cut to 4.35% by April already priced in. These developments underline the challenging outlook for the Australian dollar, as soft economic indicators erode confidence in the currency.

In New Zealand, local economic data remains subdued, reinforcing a similar outlook of tepid growth and limited inflationary pressures. Combined with the challenging global risk environment, these factors further support a bearish stance for the AUD/NZD pair.

Key Levels

• Resistance Levels: 1.10342, 1.10599, 1.10842
• Support Levels: 1.10206, 1.10056, 1.09880

Events to Watch

The local data landscape indicates persistent headwinds for the Australian dollar. January’s decline in consumer confidence highlights an ongoing restraint on household spending, potentially paving the way for further monetary easing by the RBA. The market’s increasing expectation of a February rate cut adds additional pressure to AUD sentiment. Broader market dynamics, including US inflation and rate expectations, remain pivotal, shaping sentiment around risk-sensitive currencies such as the AUD and NZD.

Conclusion

AUD/NZD remains under significant selling pressure, with key levels at 1.10206 and 1.10056 marking the immediate downside targets. Buyers must reclaim control above 1.10842 to halt the bearish momentum and shift the market narrative toward recovery.

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