**AUD/USD & NZD/USD: Antipodean Rallies Confront the Limits of Federal Reserve Dovishness**
*Based on reporting by Martin Essex, with additional research and context provided.*
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### Introduction
The global foreign exchange market is constantly shaped by an interplay of economic indicators, central bank policies, and shifting investor sentiment. Recently, the Australian Dollar (AUD) and the New Zealand Dollar (NZD) have both enjoyed significant rallies against the US Dollar (USD), driven largely by moderating US inflation and a perceived pivot by the Federal Reserve towards more dovish monetary policy. However, as optimism builds regarding the prospect of US rate cuts, the ability of AUD/USD and NZD/USD to extend gains is now limited by new concerns and evolving macroeconomic conditions.
This article analyzes the key forces behind the recent antipodean advances, assesses their sustainability, and evaluates what this means for forex traders and investors. Additional insights are incorporated from analysts at Reuters and Bloomberg to broaden the context.
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### The Recent Surge: AUD/USD and NZD/USD Rise Against USD
#### Backdrop
The strength in AUD/USD and NZD/USD can be attributed primarily to expectations that the Federal Reserve will shift to a more accommodative stance as inflation data comes in softer than anticipated. Both the Australian and New Zealand Dollars are considered risk-sensitive, and their performance is often seen as a barometer for broader sentiment on global growth and risk appetite.
#### Key Drivers
– **Weaker US Data:**
Recent US CPI (Consumer Price Index) and PPI (Producer Price Index) data have indicated a slowdown in inflation, reducing pressure on the Fed to further tighten monetary policy.
– **Fed Rate Cut Expectations:**
Lower inflation has led markets to increase their bets on Fed rate cuts, which has weakened the dollar and provided a tailwind for both AUD and NZD.
– **Commodity Support:**
Both Australia and New Zealand’s economies are heavily reliant on commodity exports. Higher prices in commodities such as iron ore, gold, and dairy have offered additional support to their respective currencies.
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### Technical Analysis: Key Levels and Momentum
#### AUD/USD
– **Resistance and Support:**
The AUD/USD pair saw resistance at levels near 0.67, a threshold it has tested multiple times over the past year without a convincing breakout. Important support can be found near 0.6620 and then at 0.6565.
– **Momentum Indicators:**
The Relative Strength Index (RSI) has approached overbought territory on daily charts, suggesting the rally may be losing momentum.
– **Moving Averages:**
The AUD/USD has traded above both its 100-day and 200-day moving averages, indicating a broadly bullish technical setup.
#### NZD/USD
– **Resistance and Support:**
The NZD/USD pair has faced tough resistance around the 0.6200 level, with support forming near 0.6150
Read more on AUD/USD trading.