**AUD/USD and NZD/USD Face Increased Bearish Pressure as USD/CAD Holds Bullish Momentum**
*Adapted from an article by Matt Weller at City Index and supported by additional market analysis.*
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## Overview
In the lead-up to significant economic events, several major currency pairs are showing distinct trends. The Australian dollar (AUD) and New Zealand dollar (NZD) are trading with a bearish bias against the US dollar (USD), while the USD/CAD pair continues to display bullish characteristics. Market focus remains sharp on upcoming announcements, especially the Reserve Bank of New Zealand (RBNZ) rate decision, U.S. Federal Reserve signals, and persistently fluctuating commodity prices.
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## Factors Driving AUD/USD and NZD/USD Lower
### 1. Diverging Monetary Policy Expectations
– **Hawkish Federal Reserve:** The U.S. Federal Reserve’s recent communications have reinforced the likelihood of higher-for-longer interest rates. Economic resilience in the United States, coupled with sticky inflation figures, has contributed to a more hawkish tone.
– **RBNZ Caution:** Anticipation is building before the Reserve Bank of New Zealand’s policy meeting. Though RBNZ is expected to hold rates steady, the risk of dovish forward guidance is pressuring NZD/USD.
– **Reserve Bank of Australia:** The RBA has signaled caution, keeping rates on hold and emphasizing economic uncertainties, which continues to weigh on the AUD.
### 2. Weak Domestic Data
– **Soft Australian Data:** Recent economic releases from Australia, including subdued GDP growth and cooling labor market statistics, have dampened sentiment for the AUD.
– **New Zealand’s Economic Slowdown:** New Zealand’s economy faces headwinds, with data pointing to limited growth and increasing risks of a recession, further dragging down the NZD.
### 3. Commodity Price Movements
– **Falling Iron Ore Prices:** Australia relies heavily on iron ore exports. Volatility in iron ore markets often translates into directional moves in AUD/USD.
– **Dairy Market Pressures:** For New Zealand, slumping dairy commodity prices apply downward pressure on the NZD.
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## AUD/USD Technical Analysis
The AUD/USD pair has been on a persistent decline since April 2024. Several key technical factors contribute to this bearish outlook:
– **Descending Trendline:** The currency pair continues to respect its multi-week descending trendline.
– **50-Day and 200-Day Moving Averages:** Both moving averages are trending lower, indicating sustained bearish momentum.
– **Support Levels:** The nearest significant support is visible at 0.6580, a level tested earlier in the year.
### Key Resistance and Support
– **Resistance Considerations:** Any bounce faces resistance at 0.6720 and 0.6780.
– **Downside Risk:** Should the current bearish trend continue, AUD/USD may retest the psychological threshold at 0.6500.
### Fundamental Outlook
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