A noteworthy surge graced the AUDNZD currency pair due to resilient commodity prices. The Australian dollar’s resurgence was buoyed by a rejuvenation in iron ore prices, a principal contributor to Australia’s export earnings. However, the fortune of the currency pair is poised to be swayed by Federal Reserve Chair Jerome Powell’s tone at the impending Jackson Hole conference on Friday. Any indication of a hawkish stance from Powell could reverberate negatively across the forex market and compound the challenges faced by strained bond markets. 

Of note, New Zealand’s debt landscape has experienced substantial upheaval in recent weeks, with 10-year yields hitting a zenith of 5.185%, having escalated by 63 basis points since mid-July. This market tumult is, in part, a reflection of the relatively hawkish outlook emanating from the Reserve Bank of New Zealand (RBNZ). In contrast, Australian debt yields have observed more modest upticks, hovering around 40 basis points, encouraging the Reserve Bank of Australia (RBA) to adopt a more dovish stance. Since the Australian economic landscape remains more favourable, the currency pair may be poised for gains while a threatening rate hike from RBNZ hangs in the balance. 

Technical 

After sharply rejecting the 1.10438 major resistance, the AUDNZD currency pair commenced a downward trend on the 4H Chart. The currency pair gained downside momentum when the 50-day moving average crossed below the 100-day moving average. However, the 50-day moving average line has edged above the 100-day moving average, which could signal the beginning of an uptrend if the distance of divergence increases.  

The formation of a falling wedge pattern supports the occurrence of an uptrend if the price action is encouraged to break out. In this case, the 1.02559 resistance set up by the 50-day moving average line may pose a significant barrier towards the upper boundary of the wedge. If a breakout of this level is sustained, the currency pair may attempt to retest the 1.09218 resistance at the Golden Ratio.  

However, the price action could break down the 1.07998 support, which could pave the way for a pullback towards the 1.07244 major support, marking the potential continuation of a downtrend.  

Summary 

The AUDNZD currency pair is poised for gains as it approaches a key juncture between the 50-day and 100-day moving averages. If the currency pair breaks through the 50-day moving average, the 1.09218 resistance at the Golden Ratio may pave the way for an uptrend. However, a move below the 100-day moving average could encourage a breakdown of the 1.07244 major support, cementing a downtrend. 

Sources: TradingView, Reuters