I am really bullish AUD/NZD and believe that this may be a good opportunity to scale into a long position. The currency pair has been rallying for 7 days straight and is finally retracing. It is in the buy zone, which I determine using Bollinger Bands. Fundamentally, the RBA left interest rates unchanged Monday evening and even though data overnight was weak, the Australian dollar continues to rally as the central bank talks up the economy and the currency.
However the big reason why I am bullish the currency pair is because New Zealand has a rate decision next Wed and they are expected to cut interest rates by 75bp!!! Even if the RBNZ cuts by 50bp, that is already more bearish for the NZD relative to the AUD.
As long as AUD/NZD holds above 1.2650, I expect a move to 1.30 and if that is cleared as well, the next area of resistance is the 2000 high of 1.3629.