Despite the S&P 500 finding a bounce off its 200-day moving average last week, equities remain in a softer spot and the negative risk mood is largely weighing on the aussie and kiwi at the moment. The charts are doing all the talking right now and in the case of AUD/USD, it is shaping up to be a rather bearish one:
The pair broke below trendline support (white line) from the October and November lows as well as the 200-day moving average (blue line) last week before extending a drop below its 100-day moving average (red line) currently. Adding to that is the drop below the 38.2 Fib retracement level of the swing higher since October at 0.6780.
The dollar continues to run hot and that is causing a bit of a double whammy for the pair but that generally tends to go hand-in-hand these days.
The greenback is staying underpinned after the hot US PCE data on Friday but even as the mood is calmer today, the aussie and kiwi are both still struggling.
From a technical standpoint, the pair looks poised to run into a test of its 50.0 Fib retracement level next at 0.6663. That will be a key line to watch before potentially talking about a return towards 0.6500 next.
Meanwhile, NZD/USD isn't faring much better as we saw price broke below multiple support levels at the end of last week as well. The January lows around 0.6190-00 was one of it as well as the confluence of the 100 (red line) and 200-day (blue line) moving averages. That means that the bias for the pair has turned more bearish now.
Adding to that, sellers are looking for a push below the 38.2 Fib retracement level of the swing higher since October at 0.6145 currently.
A break below that will pave the way for a drop towards 0.6000 next for the pair.
A lot will depend on the risk/dollar mood and also just be wary of month-end flows in the sessions ahead as we get things started on the new week. But from a technical perspective, both the aussie and kiwi are looking rather vulnerable to a further decline at the moment.