Australian dollar struggles to catch flying Kiwi

See the latest Australian dollar analysis here:

Macro Afternoon

The Australian dollar sold off again overnight, now putting in a two week long triple top pattern as it continues to rebuff the 78 cent level versus USD. The daily chart below shows a classic bearish head and shoulders medium term pattern also forming with a potential rollover here that shorter term Pacific Peso bulls maybe confusing for a new trend:

The monthly chart continues to show a staggering inflation since the COVID selloff, now settling in on multi year resistance at the 80 handle, with the 80.5 cent level from 2016/2017 proving the strongest barrier:

And it may all come down to the Kiwi as the NZ dollar continues to outpace the Aussie. The weekly chart shows a similar pattern to the Aussie with some strong resistance to overcome at the 74 cent level:

Something that is dividing the FX analysis community with Bank of America suggesting that the Kiwi is “currently the most vulnerable G10 currency with USD about to reverse higher” while¬†Morgan Stanley is short AUD/NZD, with a “short-term…consolidation in US yields and higher risk asset prices should benefit NZD/USD, which tends to gain on average in periods of “risk-on”.

The longer term AUDNZD bears (sic) this out with a continuation of lower highs for the Aussie against its Kiwi brother despite the massive iron ore tailwind and low interest rates:

The tactical picture shows a high risk/reward short AUD/NZD and indeed short AUD/USD possibility going into next month.

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