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This proved to be a good strategy, with AUD/NZD trading through the former downtrend line and closing below the December low of 1.0734. What’s more, the MACD on the daily chart is starting to head lower again and I’ll be looking for the MACD to break below the signal line.
The technical picture now looks decisively bearish and rallies should be sold into. However, looking at it fundamentally, it promises to be a rocky couple of weeks. Tomorrow we get the monthly employment report, which of course is one, if not the most important data point for the RBA, while next week we get Australian and New Zealand Q4 CPI, ahead of the January 31 RBNZ meeting.
Let’s say we get a weak Australian jobs report (i.e. the economy loses jobs), while we get a NZ CPI print above 1.5%, there will be heightened possibility that the RBNZ will hike rates, while the RBA will look more favourably at rate cuts in the coming months. This could push the pair through the 2008 low of 1.0648. Of course this is just one scenario, however with such a strong downtrend and important data due, this pair will be one to keep on the radar.