AUD/NZD recovers from the 10-DMA support

AUD/NZD dropped to a low of 1.0706 [10-DMA] before recovering losses to trade around 1.0737 levels. 

The New Zealand dollar rose in early Asia after the RBNZ held key rates unchanged and retained the neutral tone despite some sluggish economic data and a softer inflation outlook.

However, the gains were surrendered after RBNZ’s Wheeler talked about the struggle to push inflation higher due to four years of negative tradables inflation. The initial uptick in the Kiwi also indicates the money markets were expecting a more dovish tone and long-term bearish forecasts. 

Meanwhile, the Aussie side of the story is looking strong this Thursday morning, courtesy of the uptick in the AUD/JPY cross. 

AUD/NZD Technical Levels

Analyst at Westpac write, "AUD/NZD 1-3 month: A retest of the 1.0900 area seen in May is possible if iron ore’s rally since mid-June continues and global risk sentiment remains elevated.”

A break above 1.0743 [5-DMA] would expose 1.0805 [Aug 8 high] and 1.0846 [July 20 high]. On the other hand, a breakdown of support at 1.0707 [10-DMA] could yield a pullback to 1.0657 [100-DMA] and 1.0614 [200-DMA].