- May has been dominated by a broad shift across global financial assets to a “risk off” phase, with the major global stock markets and equity averages lower, Bond markets rallying to lower yields, Gold higher.
- This environment has also seen safe haven currencies strengthening (the Japanese Yen), whilst “risk currencies’, like the Australian and New Zealand Dollars have weakened.
- Despite recovery efforts by global stock markets this week, this has only seen a modest corrective weakening of the Yen (USDJPY modestly higher), whilst the “risk” or “commodity currencies” have stayed weak.
- In today’s report we spotlight the downside risks for the AUDUSD and NZDUSD Forex rates.
AUDUSD bear trend further reinforced
Yet another push lower Thursday through .6912 to reinforce the selloff already this week through various supports, and although an erratic tone over the past 24 hours still sustaining downside pressures from the earlier May rebound failures from below key .7069 resistance (from .7048 and .7027), to keep risks lower for Friday.
The early February push .7073 set an intermediate-term bear trend.
- We see a downside bias for .6880; break here quickly aims .6870/67, possibly towards a key level at .6829.
- But above .6937 targets .6959 and maybe aims for .6986.
Intermediate-term Outlook – Downside Risks: We see a downside risk for .6916.
- Lower targets would be .6829 and .6738
- What Changes This? Above .7069 shifts the outlook back to neutral; above .7206 is needed for a bull theme.
4 Hour AUD USD Chart
NZDUSD downside risks intact
An erratic consolidation Thursday but capped by initial .6591 resistance having probed at the down trend line from March, then prodding lower to sustain negative pressures from the earlier May plunge after the RBNZ rate cut, to match this low at .6524, leaving the bias lower Friday.
The April push below .6716 set an intermediate-term bear theme.
- We see a downside bias for .6524/19; break here aims for .6524/19, maybe .6500 and even .6471.
- But above .6591 aims for .6630 and maybe targets .6653.
Intermediate-term Outlook – Downside Risks: We see a downside risk for .6347 and .6195
- What Changes This? Above .6682 shifts the outlook back to neutral; above .6783 is needed for a bull theme.
4 Hour NZD USD Chart