AUDNZD has formed lower highs and lower lows inside a descending channel, and price is testing the resistance that lines up with the 1.0750 minor psychological mark.

Technical indicators are suggesting a continuation of the downtrend. The 100 SMA is below the 200 SMA to confirm that resistance is more likely to hold than to break, but the pair is above both moving averages as an early indicator of bullish pressure.

Still, stochastic is indicating overbought conditions or exhaustion among buyers, so the oscillator could be due to turn lower. This would confirm a pickup in selling momentum that could take AUDNZD back to the nearby support levels. The bottom of the channel is near the 1.0625 area and the mid-channel area of interest is close to the 1.0700 major psychological mark.

RSI has some room to climb before reflecting overbought conditions, so there could be some bullish momentum left. A break past the channel top might signal that a reversal is in order.

There are no major reports lined up from both Australia and New Zealand for the rest of the week, so the trend is likely to simply carry on. Still, any major swings in sentiment might impact these higher-yielding commodity currencies.

Apart from that, the pandemic situation in both countries might also be a key driver of price action. After all, this could impact how business activity and consumer spending fare, which in turn impact overall growth and monetary policy.

The RBA has yet to hike interest rates, but many are counting on the first increase to happen towards the latter half of the year. Meanwhile, the RBNZ already started tightening earlier on but the economy is dealing with a worse wave of the pandemic recently.