Improving economic outlooks for Australia and New Zealand have put both currencies in a position to close higher for the week for the first time in a month. Although there has been pressure on risky assets lately, this week’s positive action could be a sign of increasing demand for higher-yielding assets.
The strength in the Aussie has been attributed to predictions that the Reserve Bank of Australia will raise interest rates by 30 basis points over the next 12 months. The Kiwi is reportedly being driven by expectations that foreign investors will be aggressive supporters of the nation’s bonds after the government declared this week the budget will return to surplus in four years.
Technically the Australian Dollar is showing strength against the U.S. Dollar after producing a closing price reversal bottom on the daily charts at 1.4048. Based on the recent range of 1.4940 to 1.4048, this formation is likely to trigger a rally to the major retracement zone at 1.4494 to 1.4599.
Downtrending Gann angle resistance is at 1.4460. Key uptrending Gann angle support comes in at 1.4208 today. A break through this angle is likely to trigger a retracement to 1.4197 to 1.4161.
The New Zealand Dollar is in a downtrend on the daily chart, however, the strong rally this week has put the market in a position to change the trend back to up on a move through the swing top at .7991.
The main range is .8121 to .7755. As of this morning, the market has already retraced move than 50% of this range to .7938. The next target is the .618 level at .7981. A downtrending Gann angle is also at .7981, making this price an important target today and resistance cluster.
At this time, the fundamentals are calling for strength in the Australian and New Zealand Dollars, now it’s up to technical factors to scare out the shorts and attract fresh buying.
