Surprise from the RBNZ drags NZD and AUD to new lows
First instrument in this analysis will be the USDJPY, which at the beginning of August broke the long-term up trendline and the horizontal support on the 107. We are writing about this just now, because yesterday, price tested that area as a closest resistance. Test was positive for the sellers as the USDJPY bounced from that level and went lower. The sell signal is ON.
Next instrument is the GBPAUD, which started Wednesday with an impressive upswing. The reason for this comes from the New Zealand but we will explain that in the last paragraph. Rise on the GBPAUD was supported from the technical point of view as well. The price made a triple bottom formation on a long-term up trendline and then broke the neckline (red) and the mid-term down trendline (black). Currently, we do have a small stop on the horizontal resistance but the price should eventually break that area too.
The fundamental reason why GBPAUD went higher comes from the news important for the NZD. RBNZ surprisingly cut interest rate, which affected both currencies from Antipodes (AUD and NZD are highly correlated). NZDUSD crashed and went to the lowest levels since the beginning of 2016. Several more pips and we will be on the lowest levels since 2015 soon. The sentiment is definitely negative.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis
This article was originally posted on FX Empire
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