Active Daily Support

As can be seen from the daily chart of the AUD/NZD, the trend is evidently clear: it is to the downside: a series of lower lows and lower highs. However, we are at support from NZ$1.0587, a level delivering history as far back as early 2023. While buyers did step in from here in early February 2024, resistance from NZ$1.0673 proved to be too much of a technical ceiling for the bulls, and we are now testing the aforementioned support once more.

It is widely expected that the RBNZ will hold the line at tomorrow’s meeting at 1:00 am GMT, maintaining the Official Cash Rate at 5.50% (marking a fifth consecutive hold). Out of 24 economists from Bloomberg, 22 forecast a hold while the remaining two lean in favour of a 25bp hike to 5.75%. Markets are also pricing in just a 25% chance that the RBNZ move with a 25bp hike.

You may recall that the last meeting at the end of November 2023 maintained hawkish language and essentially was a hawkish surprise for markets amidst worries surrounding inflation. You may also note that the RBNZ, unlike most global central banks who are on the doorstep of adopting an easing policy, communicated that if inflation were to come in hotter than expected, the central bank would likely need to tighten policy.

AUD/NZD Support to Hold According to Expectations

With Aussie CPI inflation anticipated to come in slightly higher (this is the monthly CPI indicator and is released 30 minutes prior to the RBNZ announcement) and the RBNZ expected to hold, a bid in AUD/NZD from current support could emerge. This, of course, conflicts against the longer-term technical picture, echoing weakened support and a downside bias.

Overall, therefore, a possible scenario is that a short-term bid occurs following the release of the news, though getting past offers at resistance from NZ$1.0673 is questionable.

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