The dollar continues to stay strongly bid in European trading today and that is pitting the antipodean currencies at the lows for the day up against the greenback. AUD/USD is down 1% to 0.6595 currently and NZD/USD down 0.8% to 0.6150 as both currency pairs are seeing a major breakdown on the week. They are both trading to fresh five-week lows now and eyeing a steeper drop. Here's a look at both charts:
There are similarities to both charts but the scale of the drop in AUD/USD looks to be more intense, as the pair now draws closer towards a test of its 200-day moving average (blue line) at 0.6581 next. As for NZD/USD, the drop today carries over the technical breakdown that was preluded already in trading yesterday here. As mentioned then:
"In any case, the fall now looks to potentially move away from the 23.6 Fib retracement level at 0.6228 and could angle towards the 38.2 Fib retracement level at 0.6141 as the next technical test."
Adding to the technical setback for NZD/USD is a drop below its own 100-week moving average at 0.6213. That will give sellers an added edge to keep the downside momentum on the week going.
For trading today, the softer risk tone in markets is not really helping with the mood for the aussie and kiwi. European indices are lower across the board while S&P 500 futures are down 0.5% on the day currently.
Add that to higher yields and the potential technical breaches in other dollar pairs as well, and that is all setting up for a likely further decline in both AUD/USD and NZD/USD in the short-term.
