The FX:AUDNZD currency pair has been on a downward trend for the past few months, with the Australian dollar losing value against the New Zealand dollar. However, there are indications that this trend may be reversing, and traders are keeping a close eye on the pair to see if a reversal is indeed imminent.
One of the key indicators that traders are looking at is the Relative Strength Index (RSI). The RSI is a momentum indicator that measures the strength of a currency pair’s price action. When the RSI is below 30, it is considered oversold, and when it is above 70, it is considered overbought. Currently, the RSI for FX:AUDNZD is hovering around 30, indicating that the pair may be oversold and due for a reversal.
Another indicator that traders are watching is the Moving Average Convergence Divergence (MACD) indicator. The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a currency pair’s price action. When the MACD line crosses above the signal line, it is considered a bullish signal, indicating that the pair may be poised for an upward trend. Currently, the MACD for FX:AUDNZD is showing signs of a bullish crossover, which could indicate a potential reversal in the near future.
In addition to these technical indicators, there are also fundamental factors that could contribute to a reversal in FX:AUDNZD. One of these factors is the ongoing trade tensions between the United States and China. As both Australia and New Zealand are heavily reliant on exports to China, any progress in resolving these tensions could have a positive impact on both currencies.
Another factor to consider is the monetary policy of both countries. The Reserve Bank of Australia has recently cut interest rates to a record low of 0.25%, while the Reserve Bank of New Zealand has held rates steady at 0.25%. This divergence in monetary policy could lead to a strengthening of the New Zealand dollar relative to the Australian dollar, but it could also prompt the RBA to take further action to support the Australian economy.
Overall, while there are indications that a reversal may be on the horizon for FX:AUDNZD, traders should exercise caution and closely monitor both technical and fundamental factors before making any trading decisions. As always, it is important to have a solid trading plan in place and to manage risk appropriately.
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- Source: Plato Data Intelligence.