Both the AUDUSD and NZDUSD are considered “risk” currencies, meaning they typically benefit when investor sentiment improves, stocks rally, yields ease, and demand for the U.S. dollar declines. We are seeing that dynamic play out more clearly in the AUDUSD today.
Looking at the hourly chart, the AUDUSD gapped higher on the positive developments out of the Middle East and, in the process, moved above its falling 200-hour moving average, currently at 0.70637. Aside from a few brief corrective dips, the pair has managed to hold above that key technical level, keeping buyers in control.
The challenge for bulls, however, has been the 100-day moving average at 0.7083. The pair has now made three separate attempts to break and sustain a move above that level, only to be turned back each time. As a result, a battle is developing between support at the 200-hour moving average (0.70637) and resistance at the 100-day moving average (0.7083). A decisive break above the 100-day moving average would shift the focus toward the next resistance zone between 0.7100 and 0.7113 and give buyers greater control. Conversely, a move back below the 200-hour moving average with momentum would increase the bearish bias and target the 100-hour moving average, currently near 0.7032.
The NZDUSD tells a different story.
Like the AUDUSD, the pair initially benefited from the risk-on tone, gapping above its 200-hour moving average at 0.5830 and extending to a high of 0.5864. However, the upside momentum quickly faded. The pair has since rotated back lower and is now trading near the lows of the day, around 0.5833, essentially unchanged from Friday’s close.
For now, the 200-hour moving average at 0.5830 remains a key support level. As long as buyers can defend that area, the potential remains for another push higher following the current correction. However, a break below the 200-hour moving average would likely disappoint bullish traders and shift the focus toward the 100-hour moving average at 0.5818 and the nearby swing area between 0.5813 and 0.5822. A move below that support cluster would represent a more bearish technical development.
In short, improving risk sentiment is helping propel the AUDUSD higher, while the NZDUSD is struggling to maintain its gains. The technicals are sending two different messages, and the key moving averages highlighted above will help determine the next move for both pairs.
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This article was written by Greg Michalowski at investinglive.com.
