AUD/NZD simply broke a key assist stage this week!

In case you missed it, the New Zealand greenback was one of many weakest currencies final week after a slower-than-expected CPI report inspired speculations of the RBNZ following its friends by ending its price hike cycle too.

AUD, which additionally took hits from threat aversion, nonetheless managed to achieve pips on NZD although. Actually, AUD/NZD traded above a pattern line assist for a lot of the week.

AUD/NZD 1-hour Foreign exchange Chart by TradingView

However that was final week.

AUD/NZD not solely broke its pattern line assist since then, but it surely’s additionally at the moment buying and selling beneath the 1-hour chart’s 100 and 200 SMAs.

Are we taking a look at a legit draw back breakout?

It could possibly be that merchants are pricing in decrease inflation numbers from Australia.

See, markets anticipate the report back to mirror additional deceleration in quarterly and annualized shopper costs in Q1.

If we do see a slower CPI, then there can be even fewer causes for the Reserve Financial institution of Australia (RBA) to return to its rate-hiking methods.

In case of a CPI slowdown, you possibly can brief AUD/NZD to the 1.0800 psychological stage or the 1.0790 inflection level.

In the event you suppose that AUD/NZD’s breakout is legit however that AUD will see some extra shopping for earlier than making new weekly lows, then you possibly can think about promoting on the post-breakout pullbacks.

I’m eyeing the 1.0870 Pivot Level and 100 SMA ranges because it’s additionally close to the damaged pattern line assist, however I’m not discounting some promoting on the 1.0850 minor psychological stage.