AUD/NZD

Looking at the AUD/NZD retracement analysis from yesterday (7/24 - 10/10), we see the 50% retracement level has held and the pair has since traded lower. We will now look for the 38.2% retracement to provide some support on the downside. It is also important to note that the 100 day and 200 day moving averages are about to converge.

Looking at the AUD/NZD pair on a daily retracement analysis from the 7/24 high to the 10/10 low, we see the pair hovering around and constantly probing the 50% retracment for the last few sessions. It is somewhat surprising the pair was unable to breakthrough during the Asian session as the RBA announced it largest buying intervention ever, noting they purchased $3.2billion Aussie in October, this also marks the first intervention since September 2001. Helping keep the Aussie in check has been the Nikkei falling off on the open (down 4.3% right now,) following the US equity sell off earlier today. We will be watching this level closely in the coming sessions.

Although bad news from the US Financial sector has been the big driver in most traded markets, the appreciation of certain currencies against the USD has had a positive effect on those currencies in relation to other crosses. In this instance the increase in the value of the Australian Dollar against the USD, has helped sustain the Aussies appreciation against the Kiwi (NZD). Reviewing the channel below we see the pair has held the channel north for a quite a few trading sessions, with some consolidation here below the full retracement. A break out of this channel lower could find some support at the 61.8% retracement where the 50 hour moving average is crossing above the 200 hour moving average.

After the Reserve Bank of New Zealand cut rates by 50 basis points rather than the 25 expected by the market, the Kiwi as it should've got hit across the board, even against its sister economy in Australia visible with the highlighted spike on the chart below. Since the pair entered the channel between the 100 and 200 day moving averages, it has held it very well for about a month, also reacting to the 38.2% retracement level the to the upside. The two moving averages should consolidate as the pair trades in the range, a break in either direction could create a new price dynamic for the pair leading into the Reserve Bank of Australia rate decision on 10/07/08.

Reviewing the Aussie Kiwi pair on a daily chart using the 3/26/08 lows and 7/24/08 highs, we notice some key technical levels that have come into play. With the markets building in more aggressive interest rate easing in Australia and well as some earlier easing concerns in New Zealand, the losses the Aussie sustained against the Kiwi have been more measured than against other currencies. Today however, we find the pair trading in a tight range, between the 38.2% and 50% retracement for the second half of August, with one close above 38.2%. With the 100 day and 200 day moving averages providing some resistance and support along this range, a break in either direction could create a revised perspective.

Revisiting the Aussie Kiwi hourly retracement analysis from earlier this month we notice a few themes. Since the pair has broken below the full retracement, it has attempted unsuccessfully to repenetrate back into that range (highlighted below), with a number of moves toward that level. Now we notice the 50 hour moving average providing some additional resistance for the last week as the Aussie continues to be offered across the board.

The Aussie Kiwi (AUD/NZD) pair is trading weaker this session as The Reserve Bank of Australia (RBA) stated economic woes will continue with declining demand and slow growth. The dovish sentiment was confirmed when the RBA suggested a "move toward a less restrictive policy," this headline coupled with declining commodity prices this week has sent the Aussie lower across the board. The Aussie Kiwi pair broke the channel below and tested the 200 day moving average at 1.2708, a break below could trigger a more substantial sell-off.

The Aussie Kiwi pair has been in a downward trend toward yesterday's lows. Examining the pair on the 15 minute chart below, you can notice AUD/NZD again breaking through the 50 and 200 day moving averages, as well as all the Fibonacci retracement's moving back to the lows. Please review the chart below for more details.