**AUD/USD and NZD/USD Stage Recoveries: Are We Seeing the Start of a Sustained Uptrend?**
*Original article by ActionForex, expanded and supplemented with additional research*
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The Australian dollar (AUD/USD) and New Zealand dollar (NZD/USD) have both shown notable strength in recent sessions, recovering ground against the US dollar after an extended period of weakness. As traders and investors seek clarity on the sustainability of these moves, a closer analysis of fundamental drivers, technical indicators, and broader market sentiment is warranted. This article dissects the recent price actions, considers underlying catalysts, and evaluates whether these recoveries mark the beginning of a more significant bullish phase for the Aussie and Kiwi.
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**Overview: Recovery in AUD/USD and NZD/USD**
Both AUD/USD and NZD/USD bottomed out at multi-month lows earlier in the year, with bearish sentiment fueled by robust US economic data and hawkish signals from the Federal Reserve. However, the landscape has shifted in recent weeks, with both currency pairs managing to bounce off key support levels. This rebound prompts the question: Is this a brief correction within the prevailing downtrend, or the inception of a larger move higher?
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**Key Factors Behind the Initial Weakness**
Before assessing the sustainability of the recoveries, it is important to understand what drove AUD/USD and NZD/USD lower in the first place:
– **Stronger US Economic Data:** Consistently high US inflation figures, strong payrolls, and resilient GDP growth allowed the Federal Reserve to maintain a hawkish tone. This prolonged expectations of higher US interest rates for longer, benefitting the US dollar.
– **Dovish Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ):** Both the RBA and RBNZ leaned towards a more cautious stance on rate hikes, citing concerns about domestic growth and inflation expectations.
– **Risk Aversion:** Heightened concerns over China’s sluggish recovery and global growth prospects weighed on riskier assets, including both the Aussie and Kiwi.
– **Commodity Price Fluctuations:** Australia and New Zealand, as commodity exporters, were negatively affected by softer iron ore and dairy prices respectively.
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**Catalysts for Recovery**
Several factors have contributed to the recent rebound in AUD/USD and NZD/USD. These include:
– **Shifting Fed Expectations:** As US inflation data started to show signs of cooling and key employment figures softened, market participants began to price in the possibility of Fed rate cuts later in 2024. This shift reduced the appeal of the US dollar.
– **Chinese Economic Stimulus:** Recent stimulus measures announced by China, Australia’s largest trading partner, encouraged investors and led to a modest rebound in both commodity prices and sentiment toward Australia and New Zealand.
– **Hawkish RBA and Steadier RBNZ:** The RBA’s latest meeting minutes struck a more hawkish tone, highlighting upside risks to inflation and leaving the door open for further rate
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