**AUD/USD and NZD/USD: Examining Downside Risks and Technical Outlook**
*Based on an article originally by Steve Miley at ForexTraders.com, expanded with additional insight and recent market sources.*
—
### Overview
The Australian Dollar (AUD) and New Zealand Dollar (NZD) have experienced notable pressures in their respective currency pairs against the US Dollar (USD) in recent months. Both AUD/USD and NZD/USD have faced downside risks stemming from a combination of global economic shifts, local challenges, and shifting central bank expectations. In this expanded analysis, we detail the technical analysis presented in Steve Miley’s work and provide further context with data from recent market events and insights from Forex factory forums, Reuters, and Bloomberg.
—
### Macroeconomic Context
#### US Dollar Strength
– The US Dollar Index (DXY) has sustained its strength through 2024, supported by:
– Robust economic data in the United States
– Persistently high inflation, keeping the Federal Reserve’s policy stance hawkish
– Increased risk aversion due to global geopolitical events
– The divergence in monetary policy between the Federal Reserve and the Reserve Bank of Australia (RBA) as well as the Reserve Bank of New Zealand (RBNZ) has contributed to downside pressure for both AUD and NZD.
#### Commodity Market Influence
– Both Australia and New Zealand are key commodity exporters.
– Recent months have seen:
– Fluctuations in demand from China, the primary trading partner for both countries
– Volatility in commodity prices, particularly iron ore (for Australia) and dairy (for New Zealand), which impacts the trade balance and currency outlook
—
### AUD/USD: Technical and Fundamental Analysis
#### Technical Analysis (per Steve Miley, ForexTraders.com)
– AUD/USD recently failed to sustain a recovery above resistance near the 0.6700 area.
– The pair broke below the key 0.6585 support level in late May 2024, confirming a bearish breakout.
– The next major support lies in the 0.6450-0.6400 zone. A sustained break below this range could expose the pair to 0.6300 and then potentially the late 2023 lows.
#### Downside Scenarios
– Intensified USD buying may push AUD/USD below 0.6400.
– Further Chinese economic weakness could dampen commodity demand, weighing on the Australian dollar.
– Bearish technical momentum is reinforced by moving averages turning lower and momentum indicators signaling ongoing weakness.
#### Key Resistance Levels
– Near-term resistance is now at:
– 0.6585 (previous support)
– 0.6650-0.6700 (recent high and swing area)
– A recovery above these levels would be required for a shift toward a neutral/bullish outlook.
#### RBA and Domestic Factors
– The RBA has paused rate hikes in 2024, citing disinflation and a weakening employment
Read more on AUD/USD trading.