AUDNZD has been trending higher, moving inside an ascending channel visible on its 1-hour time frame.

The pair has just bounced off support and could be due for a test of resistance soon. 

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If bullish pressure is strong enough, a break past the resistance at 1.0600 could mark the start of a steeper climb. However, stochastic is already indicating overbought conditions and turning lower could indicate a return in selling momentum. 

The main event for the Kiwi is the RBNZ decision later on this week, during which the central bank might keep rates on hold while giving some hawkish hints. However, a bit of jawboning is also expected since the currency has been outpacing most of its peers for the past few weeks.

As for the Aussie, the RBA meeting minutes are up for release. The central bank was mostly upbeat in their latest policy decision so the minutes could reinforce these views. For now, though, Moody’s downgrade on big Australian banks due to housing conditions could limit the currency’s gains. 

By Kate Curtis from Trader’s Way