AUD/NZD Price Analysis — October 12

Earlier today, the bearish momentum surrounding the Chinese yuan picked up following the decision of the People’s Bank of China (PBoC) to reduce its FX risk reserve ratio to zero. This sparked some serious bearishness around the AUD, considering the ties of the Australian economy and China.

 Furthermore, Gold (XAU/USD) stalled through most of today following a strong rally last week, which extended further weakness to the Aussie. 

Meanwhile, the Reserve Bank of New Zealand has been intentional with its forward guidance, which is considered to be a rare event, given the common approach towards forwarding guidance by other central banks around the world. 

Statements from the RBNZ Chief Economist Yuong Ha last week were unexpectedly dovish, as he stated the central bank should “do too much too soon than too little too late.” As regards negative interest rates, the Chief Economist asserted that the RBNZ was considering a tiering regime. 

As a result of the announcement, the NZD has also become very weak despite the blooming risk-on mood across markets. That said, the Kiwi is now trading poorly against other major currencies, including the AUD. 

Additionally, the recent development with the PBoC also extended some weaknesses to the NZD. 

AUD/NZD Value Forecast — October 12

AUD/NZD Major Bias: Sideways

Supply Levels: 1.0900, 1.0934, and 1.1000

Demand Levels: 1.0800, 1.0725, and 1.0700

The AUD/NZD has traded throughout today without any identifiable bias. Today’s session was an endless tug-of-war between both currencies, which are currently heavily battered by their respective fundamental conditions. 

In the drawn-out consolidation, this pair slid a little bit but was immediately caught by the 50-day SMA on our 4-hour chart, indicating that the level will continue to support the AUD/NZD in the meantime. This also indicates that the pair is in favor of the upside, which means that we could see a bullish continuation when volatility returns. 

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