AUD/NZD Price Analysis — January 4

The AUD/NZD traded on a sideways momentum in the mid-European session, amid renewed market risk appetite.

This year, the Aussie and the Kiwi are expected to perform positively, as they would be bolstered by several factors, mostly hinging on the Coronavirus. Both Australia and New Zealand have shown efficiency in nipping the spread of the virus in the bud through adequate contact-tracing methods.

Optimism that the economy could recover from the COVID-19-induced financial crisis is in full swing, considering a successful rollout of vaccines. Also, additional fiscal stimulus from governments will provide further support for the currencies.

Meanwhile, China’s economy is expected to see a modest bounce in the coming months, which has raised the demand for Australian commodities like iron ore. This fundamental factor is one of the reasons why the AUD is expected to trade strongly against the NZD in the coming days and 2021 as a whole. That said, the prospects for the Aussie against other forex pairs in 2021 trumps that of the Kiwi.

The main concern for both economies in 2021 is the labor market. At New Zealand’s end, the outlook is very uncertain. According to Australia and New Zealand Banking Group (ANZ), “closed borders mean a smaller economy and recessionary impacts of this are unavoidable.” Negative rates for New Zealand in March could be actualized if the economy fails to maintain a steady recovery.

AUD/NZD Value Forecast — January 4

AUD/NZD Major Bias: Sideways

Supply Levels: 1.0700, 1.0750, and 1.0800

Demand Levels: 1.0670, 1.0600, and 1.0550

The AUD/NZD is currently trading in a sideways momentum near the 1.0700 psychological resistance. That said, we expect to see a bounce off the 1.0678 area (50 SMA) to the upper-1.0700 levels.

As illustrated above, the price dynamics are currently in favor of the AUD, thereby limiting the prospects for a decline in the near-term.

Note: Learn2.Trade is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results.