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AUD/NZD remains in a technical downtrend – BNPP

FXStreet (Barcelona) - The Team at BNP Paribas, maintains a short position on AUD/NZD, targeting 0.98, expecting RBA to cut rates in May and RBNZ to keep policy steady this month, with technicals supporting the bearish view.

Key Quotes

“Our technical strategist signals the AUDNZD remains in a medium-term downtrend. Despite the bounce of the past 48 hours, the downtrend is intact, with the pair on target to trade in the 0.95-0.9750 range.”

“The latest bounce has now broken above 1.0221 to complete a short-term double bottom and may open a further upside towards the 1.0303-1.0361 area, where a lower top is needed to maintain the prospect of a steady decline.”

“Technically, 0.9933 - 0.9962 is the projection target over the coming weeks. The outlook for the projection is consistent with the risk-reward on our short recommendation with a stop above the 1.0361 area.”

“BNP Paribas FX Positioning Analysis also suggests short AUDNZD positioning is not stretched and there is significant potential for shorts to build. The current short exposure at -6 (scale of -100 to +100) is far from the July and March 2014 troughs of -18 and -37, respectively.”

“Assuming our call that the RBA is more likely to cut rates than the RBNZ proves to be correct, positioning is no barrier to further shorts building.”

“We expect the RBA to cut rates on 5 May and the RBNZ to keep policy steady on 30 April.”

“We recommend selling AUDNZD at 1.0225, target 0.98, stop at 1.0370.”

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