- Early February has been dominated by an violent sell off in global equity markets, primarily triggered by a shift to higher yield territory across the UST curve (with the 10yr pushing though 2.70%), in turn assisted by potential inflationary pressures developing, highlighted by the recent rise in US average hourly earnings.
- Forex markets have been impacted, with the US Dollar seen as a safe haven and generally strengthening versus most major currencies (apart from the ultimate safe haven, the Yen).
- This has seen the AUDUSD currency rate sell off through key supports, most notably recently through .7805, shifting the intermediate-term outlook to bearish..
- For the NZDUSD forex rate, the recent surrender of .7231 neutralised the bullish intermediate-term trend for a non-trend environment, BUT with risk growing for a bearish shift below .7138.
Despite the negative price action last week with the break of the key .7805 level (see below),, the dip and then firm rebound on Friday , shifts risk for a potential corrective recovery for Monday.
The early February break below .7805 produced a shift to a bearish intermediate-term view into February.
- We see an upside bias for .7843; break here aims for .7876 and potentially targets .7910/17.
- But below .7780 opens risk down to .7756, maybe towards .7733 and even .7710.
Intermediate-term Outlook – Downside Risks:
- Whilst below .7960 we see a bear theme to target .7635 and .7500.
What Changes This? Above .7960 signals a neutral tone, shifting bullish below .8046.
Resistance and Support:
4 Hour AUDUSD Chart
A Friday rebound from a mini-basing attempt, easing negative forces from the bearish break Wednesday through the key .7231 level, flipping the bias back to the topside for Monday .
The break below .7231 produced a shift to a range defined as .7420 to .7138, with the asymmetrical risks for a bearish shift into February below .7138.
- We see an upside bias for .7263; break here aims for .7297, even .7351.
- But below .7218 opens risk down to .7175.
Intermediate-term Range Breakout Parameters: .7805 to .8136.
- Downside Risks: Below .7805 sees a bear trend shift to target .7635 and .7500
- Upside Risks: Above .8136 sets a bull trend to aims for .8164/66, .8295 and the .8452/82 key retracement target area.
Resistance and Support:
4 Hour NZDUSD Chart