AUD/NZD trades at fresh weekly highs above 1.0340 amid risk-off market sentiment

AUD/NZD recovers from Monday losses, trades above 1.0350
China’s real-estate Evergrande weighs on the market sentiment
On Tuesday, the RBA will release its last meeting minutes.
RBNZ’s Hawksby: We had more confidence that employment was at its maximum sustainable level

After trading lower on Monday, the AUD/NZD is pairing some of its losses, is trading at 1.0347 up 0.25% at the time of writing. The market sentiment is in risk-off mode caused by China’s Evergrande woes and the Delta variant spread, triggering a flight towards safe-haven assets.

Reserve Bank of Australia minutes to be released at 0130 GMT

The Reserve Bank of Australia will unveil its monetary policy minutes. Despite the Delta variant outbreak in the last month and stringent measures imposed by Prime Minister Morrison, the RBA kept its decision to reduce its weekly bond purchases from A$5 Billion to A$4 Billion, nevertheless extended the duration of the program until at least February of 2022. The latter was due to support the Delta outbreak ongoing in the country.

In the New Zealand economic docket, the RBNZ Assistant Governor Christian Hawkesby hit the wires. He made comments about monetary policy that the statement showed that the bank had more confidence that employment was at its maximum sustainable level. Additionally, he said, “that monetary policy response would be required for future health lockdowns if there was more enduring impact on inflation, employment.”

Read more:  RBNZ’s Hawksby: We had more confidence that employment was at its maximum sustainable level

Later in the day, the NZ Credit Card Spending for August (YoY) and the NZ GDT Price Index will be released. The previous readings were 6.9% and 4%, respectively.

AUD/NZD Price Forecast: Technical outlook

The AUD/NZD is trading well below the daily moving averages, suggesting downward pressure. The pair is trading above the 38.2% of its latest Fibonacci retracement but beneath a downslope trendline that acts as the first resistance level, around  1.0365-70. A break above that trendline could push the AUD/NZD pair towards the 61.8% Fibo retracement level at 1.0386, followed by a challenge to 1.0400.

On the flip side, failure at 1.0365-70, the bears could exert downward pressure on the pair, exposing the 1.0300 level and the possibility of a retest of this year’s lows at 1.0278.

The Relative Strength Index is at 42.06, aiming higher, though it remains below the 50-midline, still supporting the downward bias.

KEY TECHNICAL LEVELS TO WATCH