AUD/USD and NZD/USD Fundamental Analysis: Aussie CPI in Focus

It is a busy morning for the AUD/USD and the NZD/USD. In the early hours, New Zealand trade figures drew interest.

In March, the New Zealand trade deficit widened from NZ$796 million to NZ$1,273 million. Year-over-year, the trade deficit widened from NZ$14,720 million to NZ$16,400 million. Economists forecast deficits of NZ$920 million and NZ$16,450 million, respectively.

According to NZ Stats,

• Goods exports increased by NZ$40 million (0.6%) to NZ$6.5 billion, while imports jumped by NZ$719 million (10%) to NZ$7.8 billion.
• Petroleum and product imports surged by NZ$630 million (99%), with aircraft, spacecraft, and parts imports up NZ$257 million (483%).
• Preparations of cereals, flour, starch, and milk (incl. infant formula) exports jumped by NZ$135 million (91%), with wine exports rising by NZ$59 million (39%).
• Exports to China fell by NZ$111 million (5.7%), while exports to Australia jumped by NZ$193 million (30%).

Later this morning, Australian inflation figures for the first quarter will garner more interest. The RBA stood pat on monetary policy this month. However, RBA Governor Philip Lowe warned that hitting the pause button did not mean an end to the monetary policy tightening cycle. Today’s CPI Report could dictate RBA moves over the near term.

US Market Influence

Overnight US economic indicators and corporate earnings set the tone. The CB Consumer Confidence Index fell from 104.2 to 101.3 in April versus a forecast of 104.0. However, UPS (UPS) earnings results and sliding deposits at First Republic Bank (FRC) sent the pair into the deep red on Tuesday, with the recession alarm bells ringing.

The numbers and corporate earnings impacted sentiment toward Fed monetary policy. According to the CME FedWatchTool, the probability of a 25-basis point May interest rate hike fell from 90.5% to 76.1% on Tuesday. Significantly, the chances of a June hike declined from 24.7% to 9.2%, supporting the bullish start to the Wednesday session.

Later today, US core durable goods and trade data will draw interest. A larger-than-expected fall in core durable goods orders would further fuel recession fears. There is no Fed talk for investors to consider. The Fed entered the blackout period on Saturday.

AUD/USD Price Action

The Aussie was up 0.13% to $0.66340. A mixed start to the day saw the AUD/USD fall to an early low of $0.66229 before rising to a high of $0.66351.

Technical Indicators

Resistance & Support Levels

The AUD/USD needs to move through the $0.6648 pivot to target the First Major Resistance Level (R1) at $0.6683. A return to $0.6650 would signal a bullish session. However, the Australian inflation numbers need to support a pre-US session breakout.

In the case of a breakout session, the Aussie would likely test resistance at the Tuesday high of $0.67055 but fall short of the Second Major Resistance Level (R2) at $0.6740. The Third Major Resistance Level (R3) sits at $0.6831.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6591 in play. However, barring another risk-off-fueled sell-off, the AUD/USD pair should avoid the Second Major Support Level (S2) at $0.6557.

The Third Major Support Level (S3) sits at $0.6466.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The AUD/USD sits below the 50-day EMA, currently at $0.66935. The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

A move through R1 ($0.6683) would give the bulls a run at the 50-day ($0.66935) and 100-day ($0.66980) EMAs. A breakout from the 50-day EMA would bring the Tuesday high of $0.67055 into play. However, failure to move through the 50-day EMA ($0.6935) would leave S1 ($0.6591) in view.

NZD/USD Price Action

This morning, the Kiwi was up 0.13% to $0.61442. A mixed start to the day saw the NZD/USD fall to an early low of $0.61350 before rising to a high of $0.61478.

Technical Indicators

Resistance & Support Levels

The NZD/USD has to move through the $0.6152 pivot to target the First Major Resistance Level (R1) at $0.6171. A return to $0.6175 would signal a bullish session. However, market risk sentiment must support a pre-US session breakout.

In the case of a breakout session, the Kiwi would likely test resistance at the Tuesday high of $0.61873 but fall short of the Second Major Resistance Level (R2) at $0.6206. The Third Major Resistance Level (R3) sits at $0.6260.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6118 in play. However, barring another risk-off-fueled sell-off, the Second Major Support Level (S2) at $0.6099 should limit the downside.

The Third Major Support Level (S3) sits at $0.6045.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The NZD/USD sits below the 50-day EMA, currently at $0.61791. The 50-day EMA fell back from the 100-day and 200-day EMAs, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($0.6171) would give the bulls a run at the 50-day EMA ($0.61791) and the Tuesday high of $0.61873. However, failure to move through the 50-day EMA ($0.61791) would leave S1 ($0.6118) in play. A move through the 50-day EMA would send a bullish signal.