AUD/NZD trades above 200-DMA for the first time since Oct 2016

The offered tone around NZD gathered pace after the RBNZ published dovish OCR forecasts. The 2-year New Zealand bond yield, which tracks interest rate expectations, dropped more than five basis points.

Consequently, AUD/NZD cross jumped above the 200-DMA level of 1.0527 and was last seen trading around 1.0555. The cross was last seen trading above the 200-DMA on October 26, 2016.

NZD traders were expecting 1-1/2 rate hikes over the next one year or so. However, the RBNZ forecasts show the central bank intends to keep interest rates 1.75% through June 2019. The dovish forecasts surprised markets, thus leading to unwinding of NZD longs.

AUD/NZD cross jumped from 1.0516 to 1.0556, extending yesterday’s rally from the low of 1.0428.

AUD/NZD Technical Levels

A break above 1.0572 (Jan 11 high) would open doors for 1.0612 (Nov 25 high) and 1.0621 (Oct 18 low). On the other hand, a breakdown of support at 1.0527 (200-DMA) would shift risk in favor of a drop to 1.0513 (100-DMA) and 1.0492 (5-DMA).