The New Zealand Dollar remains supported vs. the Australian dollar following the latest RBNZ rate meeting and looks to drift to the 1.04 level.
At its latest rate meeting, the RBNZ refrained from cutting rates, but left the door open for further rate cuts in the months ahead by saying “a lower OCR may be needed over time.” The RBNZ think lower domestic demand, weaker house prices, and soft business sentiment could hit the labor market and keep inflation soft unless rate cuts are implemented. As for inflation, the latest reading showed that annual inflation stood at 1.5%, meaning that inflation is relatively close to the lower end of the 1 to 3 percent target band of the bank.
However, as the markets see it, the outlook for Australia is worse, and the AUDNZD has, therefore, drifted lower. From a technical perspective, the price formed a descending triangle pattern between late April and early June. The price tried to break lower from June 5 until June 25, but it is first in the last few days that the price finally managed to get out from the bearish triangle.
The pattern is now suggesting that AUDNZD could reach 1.0380 as long as the price remains below the June 24 high of 1.0552.Don’t miss a beat! Follow us on Twitter.