AUDNZD has been trending higher but is recently testing a ceiling at the top of its ascending channel visible on the 4-hour time frame.

Price could be due for a correction to the channel support and applying the Fib tool shows the potential inflection points. 

The 61.8% Fib is closest to the channel support at the 1.0850 minor psychological level and the 100 SMA, which could hold as dynamic support. This short-term moving average is above the longer-term 200 SMA to signal that the path of least resistance is to the upside. 

However, stochastic is turning lower to show that profit-taking is likely to happen soon. In that case, the resistance is likely to hold and might provide an opportunity for a countertrend play. 

The Kiwi was weighed down by the release of the New Zealand Treasury’s pre-election update, which contained downgrades on growth forecasts and a less upbeat view on employment and wages. New Zealand’s trade balance is up for release next and a narrower deficit of 200 million NZD is eyed compared to the earlier 242 million NZD shortfall, likely indicating a pickup in export activity.

Meanwhile, the Aussie has been able to stay afloat on the lack of negative updates from the Land Down Under. The comdoll has also drawn support from a rebound in iron ore prices after the commodity rebounded off technical support levels. There are no major reports lined up from both Australia and New Zealand until the end of the week, though, so profit-taking or consolidation could ensue. 

By Kate Curtis from Trader’s Way