The AUDUSD and NZDUSD are both moving higher to start the North American session, supported by an improving risk-on backdrop and constructive technical developments. U.S. equity futures are pointing to a stronger open, with S&P 500 futures up roughly 21 points and Nasdaq futures ahead by about 252 points. Helping sentiment are reports that discussions are continuing around a possible 10-day cease-fire in the Middle East, along with renewed optimism that the Strait of Hormuz could reopen to normal shipping traffic. Those headlines have encouraged investors to move back toward risk-sensitive assets, providing a tailwind for both the Australian and New Zealand dollars.
For the AUDUSD, the technical picture has also shifted more favorably for buyers. The pair found willing buyers on Friday and again during today’s Asian session within a key swing area between 0.6962 and 0.6978. That support zone once again proved its importance, allowing buyers to define their risk against the lower end of the range and begin another move higher.
The buying interest gained momentum after the pair broke above its 100-hour moving average and then successfully retested that moving average, currently near 0.6988. Holding that level as support gave buyers greater confidence to extend the rally, with the price reaching a session high near 0.7014 before easing modestly. Even with the slight pullback, the pair remains comfortably above the 100-hour moving average, keeping the near-term bias tilted in favor of the bulls.
For buyers to maintain control, the price needs to remain above the 100-hour moving average. A move back below that level would weaken the bullish outlook and shift the focus back toward the sellers, with the rising 200-hour moving average at 0.6962 becoming the next logical downside target. On the topside, a break above today’s high and last week’s high near 0.7021 would strengthen the bullish case and expose the 100-day moving average at 0.7058. That level is particularly noteworthy because the pair has not traded above its 100-day moving average since June 15, making it an important technical hurdle that could attract additional buying if broken.
The NZDUSD has displayed even stronger upside momentum over the past several weeks. Since establishing a low on June 26, the pair has consistently carved out a series of higher highs and higher lows, reinforcing the positive technical trend. After reaching a high of 0.5862 last Wednesday, the pair entered a healthy corrective phase that allowed the rising 100-hour moving average to catch up with price.
That moving average was tested during early Asian trading today, and buyers once again stepped in aggressively. The successful defense of the 100-hour moving average gave traders another opportunity to define their risk and helped launch the latest push higher, forcing short-term sellers onto the defensive.
However, the rally has now run into an important area of resistance. Today’s high stalled just below last week’s high and the June 15 high, both clustered around the 0.5862 level. That price now represents the key ceiling for buyers. If the pair can break above 0.5862 and sustain trading above that level, it would signal another bullish breakout and increase the likelihood of an extension higher. Until then, buyers still have work to do.
On the downside, the first line of defense remains the rising 100-hour moving average, currently near 0.5835. As long as the price stays above that support, buyers retain the near-term technical advantage. A move below the moving average, however, would suggest upside momentum is fading and could trigger a deeper corrective move before the broader uptrend resumes.
This article was written by Greg Michalowski at investinglive.com.