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8 Jul 2013
Flash: AUD/NZD momentum indicators pointing lower – Westpac
FXstreet.com (New York) - According to Sean Callow, a Global FX Strategist at Westpac, “The AUD/NZDs downtrend resumed with the break below 1.1755 – momentum indicators are mostly pointing downwards, endorsing our view.”
An RSI break below trend support would complete the picture. The next major downside target is 1.1620 – the March-08 peak. “Longer-term, one extreme downside target is 1.10. We derive that from the break of a multi-year head-and-shoulders neckline in Jan-13. The head’s height is around 15 cents, which is textbook guidance for the ensuing decline’s magnitude.” Callow adds.
Moreover, the AUD/NZD is well below its long-term average and starting to test the lower end of post-1985 ranges. However, the 1.10-1.15 bucket still accounts for a solid 19% of all daily closes. NZ policymakers presumably aren’t thrilled by this upward pressure on NZD TWI but it reflects the cyclical divergence between the two economies.
An RSI break below trend support would complete the picture. The next major downside target is 1.1620 – the March-08 peak. “Longer-term, one extreme downside target is 1.10. We derive that from the break of a multi-year head-and-shoulders neckline in Jan-13. The head’s height is around 15 cents, which is textbook guidance for the ensuing decline’s magnitude.” Callow adds.
Moreover, the AUD/NZD is well below its long-term average and starting to test the lower end of post-1985 ranges. However, the 1.10-1.15 bucket still accounts for a solid 19% of all daily closes. NZ policymakers presumably aren’t thrilled by this upward pressure on NZD TWI but it reflects the cyclical divergence between the two economies.