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Concerns about a bigger-than-expected Chinese slowdown are also having an impact on the AUD as the market corrects. The RBA said further weakness in the currency is likely and necessary with this jawboning contributing to the weakness.
AUD/NZD was one of the pairs that enjoyed unprecedented gains over the past couple of months and rallied to a high of $1.1432. This recent AUD weakness has seen the pair pull back significantly and I feel this could tempt some traders into fresh longs.
The pair had climbed into overbought territory as it rallied almost uninterrupted between May and June. The recent pullback is now testing the 38.2% retracement of the May-June rally and I suspect we might see support kick in at some stage.
There is also an uptrend support line that has been in place since April. This line is likely to come into play as the pair approaches $1.1100.