**AUD/USD and NZD/USD Outlook: Bearish Pressure Builds Ahead of RBNZ Meeting; USD/CAD Eyes Bullish Potential**
*Original article by James Stanley, Forex Analyst, ForexFactory.com. Expanded and rearticulated with additional market insight.*
The foreign exchange markets are seeing heightened volatility as traders brace for pivotal monetary policy decisions and continuing shifts in global risk sentiment. Particularly under the spotlight are the Australian Dollar (AUD), the New Zealand Dollar (NZD), and the Canadian Dollar (CAD), all of which are responding to both local data and broader macroeconomic trends such as Federal Reserve policy, commodity pricing, and China’s economic data.
The AUD/USD and NZD/USD pairs have continued to slide, reflecting weakening sentiment in both currencies. Meanwhile, the USD/CAD pair shows signs of bullish continuation driven by rising US dollar strength and oil market implications for the Canadian economy.
## Bearish Pressure Mounts on AUD/USD
The AUD/USD currency pair has faced a surge in bearish momentum amid a mix of domestic economic concerns and external pressures, particularly weaker economic data out of China and prevailing hawkish tones from the US Federal Reserve.
### Key Drivers of AUD/USD Weakness:
– **China’s Economic Slowdown**:
– Australia’s economic fortunes are closely tied to China, its largest trading partner.
– The latest macroeconomic data from China shows declining industrial output and weaker-than-expected GDP growth of 4.9%, below consensus expectations.
– Diminishing demand from China for Australia’s key exports, such as iron ore and coal, puts downward pressure on the Australian Dollar.
– **US Dollar Strength**:
– The US Dollar Index (DXY) has remained strong, supported by expectations that the Federal Reserve may keep interest rates higher for longer.
– This dollar strength pushes the AUD/USD pair lower due to relative interest rate differentials and investor preference for the Greenback amid global uncertainty.
– **Domestic Economic Concerns**:
– Australia’s quarterly inflation data, while still elevated, has shown signs of cooling, reducing expectations of further tightening from the Reserve Bank of Australia (RBA).
– The softer CPI (Consumer Price Index) report has dented the Aussie’s appeal as investors temper bets on further rate hikes.
– **Technical Breakdown**:
– The AUD/USD pair recently broke below key support around the 0.6620 area, creating a bearish technical structure.
– Momentum indicators, including the Relative Strength Index (RSI), are trending bearish, signaling the potential for further downside movement.
### Forecast and Support/Resistance Outlook:
– Immediate support resides at 0.6535, with stronger longer-term support at 0.6450.
– Resistance levels to watch will be around 0.6620 and 0.6670.
– A continued bearish bias is favored unless a fundamental catalyst or shift in sentiment emerges.
## NZD/USD Pressured Ahead of RBNZ Policy Decision
The New Zealand Dollar (NZD) faces a difficult path ahead of the Reserve Bank of New Zealand (RBNZ)’s impending rate decision. The RBNZ has previously paused its rate hiking cycle, but traders are closely watching for any change in tone regarding future moves.
### Factors Impacting NZD/USD:
– **Upcoming RBNZ Meeting**:
– Markets are not anticipating a rate hike at the upcoming meeting but will closely scrutinize the language used in the bank’s statement.
– A dovish or even neutral tone is likely to pressure the Kiwi further, while any hawkish surprises could offer temporary relief.
– **Inflation Pressures Remain**:
– New Zealand’s inflation is still above the RBNZ’s comfort level, sitting at 5.6% year-over-year as per the last report.
– However, core components are showing signs of moderation, giving the bank an opportunity to maintain its current policy pause.
– **Risk Sentiment and USD Dynamics**:
Read more on USD/CAD trading.