AUDNZD has been trending lower inside a descending channel with its lower highs and lower lows on the 4-hour time frame. Price is currently testing the channel resistance and could be due for a move back to support.
The Fibonacci extension tool shows that the 78.6% level is in line with the bottom of the channel at the 1.0400 mark. A smaller dip could find support at the 38.2% extension around 1.0470 or the 50% level in line with the mid-channel area of interest.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction than to reverse. Then again, the gap between the indicators is narrowing to reflect that bearish pressure is slowing.
RSI is pointing down to show that selling pressure is in play and could be enough to take AUDNZD further south, possibly until the full extension at 1.0371. Stochastic is also heading lower and is about to cross the center line to signal stronger bearish momentum.
The RBA cut interest rates by 0.25% twice in a row while the RBNZ had one rate cut earlier on. Market participants are projecting another interest rate cut in August, which might mean more bearish pressure for the Kiwi.
In that case, price could still move past the channel top around the 1.0550 minor psychological mark and the 200 SMA dynamic inflection point to start a reversal from the slide.
There are no catalysts from both Australia and New Zealand this week, but next week has a busy schedule. New Zealand’s quarterly CPI is up for release and could be an indicator of whether or not the RBNZ could push through with another cut. Meanwhile, Australia has its jobs report due next week as well.