**AUD/USD and NZD/USD Face Ongoing Downside Risks: Comprehensive Technical Analysis**
*Adapted from an article by Hamish Raw at ForexTraders.com*
The currency markets continue to reflect elevated volatility heading into mid-2024, particularly with respect to the Australian Dollar (AUD/USD) and New Zealand Dollar (NZD/USD) pairs. Both currencies have recently encountered heightened downside pressures against the U.S. Dollar due to a confluence of fundamental and technical factors. This comprehensive analysis covers the latest price moves, charts, macroeconomic catalysts, technical triggers, and what traders should watch for next.
## Macroeconomic Backdrop: US Dollar Strength and APAC Weakness
Before diving into the technicals, it is crucial to understand the broader macroeconomic context:
– **Persistent US Dollar Strength:** The U.S. Dollar Index (DXY) has remained strong amid expectations that the Federal Reserve will keep interest rates higher for longer. Sticky inflation, a resilient labor market, and robust US GDP data have underpinned the greenback.
– **Dovish RBA and RBNZ:** While the Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) have taken a cautious stance due to sluggish domestic economies, market participants perceive reduced odds of additional rate hikes from both central banks.
– **China’s Role:** Both AUD and NZD are highly sensitive to China’s demand story. With China showing slower growth and lackluster stimulus, there is subdued demand for Australian and New Zealand commodities.
– **Risk Appetite:** Episodes of risk aversion have seen investors favor traditional safe havens like the USD over risk-driven currencies such as AUD and NZD.
## AUD/USD – Technical Analysis and Key Levels
**Current Price Structure and Recent Moves**
– The AUD/USD pair has been trading on the back foot, struggling to sustain rallies above significant resistance.
– As of the beginning of June 2024, the pair has consistently failed to break above 0.6650-0.6675, a key supply zone.
– Downside moves have seen the pair retest 0.6550, and technical momentum points toward further declines.
**Daily Chart Highlights**
– The AUD/USD daily chart shows a clear downtrending channel, with sellers capping upside attempts.
– The 21-day Exponential Moving Average (EMA) has acted as dynamic resistance since the last rally attempt.
– Key support levels are located near:
– 0.6550 (recent swing low)
– 0.6500 (psychological and technical round number)
– 0.6460 (previous pivot and multi-month low)
– Resistance now resides between:
– 0.6610 (descending trendline from prior highs)
– 0.6650-0.6675 (congestion zone and former support)
**Indicators and Oscillators**
– The Relative Strength Index (RSI) remains just above
Read more on AUD/USD trading.