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AUD/USD and NZD/USD Fundamental Daily Forecast – Technical Factors Driving Early Price Action

By:
James Hyerczyk
Published: Jun 18, 2018, 05:28 UTC

The bias is to the downside because the trend is down, however, if there isn’t any may news regarding US-China trade relations, traders may take the opportunity to book some profits and perhaps form a short-term bottom due to oversold technical conditions.

AUD/USD and NZD/USD

After early session weakness, the Australian and New Zealand Dollars are trading slightly better, setting up a possible technical closing price reversal bottom. There weren’t any major fundamental events early Monday so most of the price action is related to profit-taking and position-squaring probably related to oversold technical conditions.

At 0457 GMT, the AUD/USD is trading .7443, up 0.0001 or +0.01% and the NZD/USD is at .6941, up 0.0001 or +0.01%.

AUDUSD
Daily AUD/USD

Most Aussie and Kiwi investors are watching the U.S. Dollar’s reaction to rising tensions between the United States and China. Some investors believe that as long as the two major trading partners are talking then they could avoid a full-blown trade war.

On Friday, the U.S. announced it would enforce tariffs on $50 billion in Chinese goods. Shortly thereafter, China said it would impose 25 percent tariffs on 659 U.S. products, ranging from soybeans and autos to seafood. However, these threats were raised weeks ago so it’s safe to say they have already been priced into the market.

The next move by either party is likely to create volatility in the Forex markets with most traders expected to move money into safe haven assets like Treasurys, the Japanese Yen and gold.

NZDUSD
Daily NZD/USD

The AUD/USD and NZD/USD are likely to weaken because they are considered higher-yielding, higher-risk assets. Furthermore, they are also major trading partners with China.

The longer-term outlook for the Australian and New Zealand Dollars is bleak because of the widening divergence between the monetary policies of the hawkish U.S. Federal Reserve and the dovish Reserve Bank of Australia and New Zealand.

Looking ahead to Monday’s U.S. trade, at 1400 GMT, traders will get the opportunity to react to the NAHB Housing Market Index. It is expected to come in unchanged at 70. At 1430 GMT, the Conference Board will release data on the Australian Leading Index.

Later in the session at 1700 GMT, Federal Open Market Committee member Raphael Bostic speaks. This is followed by a speech from FOMC member John Williams at 2000 GMT. Both are not expected to talk about policy.

The bias is to the downside because the trend is down, however, if there isn’t any may news regarding US-China trade relations, traders may take the opportunity to book some profits and perhaps form a short-term bottom due to oversold technical conditions.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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