**AUD/USD and NZD/USD Technical Outlook: Continued Downside Risks**
*Adapted from an article by Hamish Raw, ForexTraders.com. Additional analysis and commentary included.*
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### Overview
The Australian Dollar (AUD) and New Zealand Dollar (NZD) have both been under significant downside pressure against the US Dollar (USD) in recent months. Throughout 2024, both AUD/USD and NZD/USD have struggled to gain upward momentum as market sentiment has leaned increasingly towards risk aversion, driven by global economic uncertainties, shifting central bank policies, and persistent concerns over China’s economic outlook.
This article examines the current technical landscape of the AUD/USD and NZD/USD currency pairs, highlighting key support and resistance levels, and discussing the primary drivers that could dictate their future direction. It also incorporates relevant insights from recent market developments and opinions from analysts.
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### Fundamental Drivers
Both the Australian and New Zealand Dollars are recognized as “commodity currencies,” heavily influenced by global demand for raw materials, particularly from China and other major trading partners. However, several fundamental drivers have coalesced to reinforce downward pressure over the spring and early summer of 2024:
#### 1. Divergence in Central Bank Policies
– **Federal Reserve**: The US Federal Reserve maintained a hawkish stance longer than anticipated, keeping interest rates high amid persistent inflationary pressures. While recent indications suggest a potential pause or slight easing later in the year, US yields remain attractive to global investors.
– **Reserve Bank of Australia (RBA)**: The RBA adopted a relatively cautious approach concerning interest rate hikes. Concerns over household debt and slowing domestic economic momentum have limited its willingness to match the Fed’s aggressiveness.
– **Reserve Bank of New Zealand (RBNZ)**: The RBNZ signaled the end of its tightening cycle. With inflation showing signs of moderation and economic activity slowing, speculation has increased over potential rate cuts in late 2024 or early 2025.
#### 2. China’s Economic Challenges
– As China is the top export destination for both Australia and New Zealand, any deceleration in Chinese economic activity directly impacts their currencies.
– Recent reports point to weaker-than-expected GDP growth, persistent property market stress, and subdued consumer spending in China.
– Efforts by Chinese policymakers to stimulate the economy have not yet produced a sustained turnaround, keeping bearish sentiment entrenched for AUD and NZD.
#### 3. Risk Sentiment and Safe Haven Flows
– Ongoing geopolitical tensions, most notably in Eastern Europe and the South China Sea, have bolstered demand for the US Dollar as a global safe haven.
– Large-scale outflows from riskier assets, such as emerging market equities and commodities, have further supported USD strength.
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### Technical Analysis: AUD/USD
The AUD/USD pair has retained a distinct bearish bias since breaking below the key support region at 0.6600 earlier in 2024. Let’s examine the technical backdrop in detail
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