The AUDNZD is at a crossroads ahead of the RBA.
And there’s no denying the bearish momentum.
Both the short-term trend from last August and the longer term trend since 2011 are pointed lower.
However, I have to caution shorts here.
The Australian dollar cross carved a bullish engulfing range last week which suggests we could continue to see strength in the near term.
Furthermore, the AUDNZD is hovering just below trend line resistance from the 2018 high at 1.1175.
The fact that buyers haven’t backed down from the level in recent days suggests a breakout may not be far away.
But let’s not lose sight of the bigger picture.
Yes, AUDNZD could be gearing up for a push higher. But just how far might buyers be willing to counter the broader (bearish) momentum?
For that we turn to the weekly time frame:
Although AUDNZD remains range-bound over the last few years, the pair broke a critical support level last December.
You can even see where the pair retested former wedge support as new resistance in the chart above.
So even if AUDNZD bulls manage to break out here, the big picture looks relatively bearish.
That said, a daily close above the confluence of resistance at 1.0450 could present a buying opportunity, at least in the short term.
Key resistance above 1.0450 comes in around 1.0670.
Alternatively, a rejection from 1.0450 would re-expose the year-to-date lows near 1.0300.
Keep in mind that the RBA rate decision and statement are only a few hours away at 11:30 pm EST.
Those events will likely decide the immediate path forward for AUDNZD.
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IMPORTANT: I use New York close charts so that each day closes at 5 pm EST.
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