The NZD/USD currency pair is maintaining modest recovery gains above the 0.5600 level as traders await the upcoming US Non-Farm Payrolls (NFP) report. The pair has shown resilience amid a slightly constructive risk sentiment, with short-term gains supported by broader dollar weakness and persistent commodity-driven strength in the New Zealand Dollar (NZD). This article offers a complete overview of the subject, prepared by the brokers at Taurus Partners.
Market Overview
The early European session on Wednesday saw the AUD/JPY cross trading in positive territory near 113.00, reflecting a broadly bullish tone across risk-sensitive pairs. The Australian Dollar (AUD) has strengthened against the Japanese Yen (JPY) following a hawkish Reserve Bank of Australia (RBA) policy stance, underscoring investor appetite for higher-yielding assets.
The AUD/JPY cross remains firmly above the 100-day exponential moving average (EMA), supporting the constructive outlook. Technical momentum indicators, such as the Relative Strength Index (RSI), remain in positive territory, suggesting room for further upside before any overbought conditions emerge.
Immediate resistance for AUD/JPY is noted at 113.70, with the upper Bollinger Band near 113.80 reinforcing this level. On the downside, support levels are seen at 111.40, followed by the 110.15–110.35 zone, which aligns with prior consolidation areas and key Bollinger Band structures.
RBA Hawkish Stance and Market Reaction
The Reserve Bank of Australia raised the Official Cash Rate (OCR) by 25 basis points (bps) to 4.10% during its March policy meeting, following a similar increase in February. This marks the first back-to-back hikes since mid-2023.
RBA Governor Michele Bullock emphasized that prices remain too high, with concerns about second-round inflation effects driven by rising energy costs amid escalating tensions in the Middle East. This hawkish commentary provided additional support to the AUD, strengthening its position against the JPY and contributing to the bullish technical bias.
Traders are now turning attention to Australia’s employment data for February, which is scheduled for release later on Thursday. The Unemployment Rate is expected to remain steady at 4.1%. Any signs of slackening employment could weigh on the AUD, especially if the US labor market demonstrates continued resilience, putting risk-sensitive currencies under pressure.
Geopolitical Risks and Safe-Haven Flows
Geopolitical developments are also influencing FX markets. Reports indicate that Iranian security chief Ali Larijani was killed in an Israeli airstrike, prompting a vow of decisive retaliation by Iranian army chief Amir Hatami.
Escalating tensions in the Middle East may fuel safe-haven demand, boosting the JPY and creating headwinds for the AUD/JPY cross. Traders should remain cautious as any prolonged conflict could trigger volatility spikes and temporary risk-off behavior, which often benefits safe-haven currencies such as the JPY and the USD.
Technical Analysis: AUD/JPY
The daily chart presents a bullish near-term bias for AUD/JPY, with price remaining well above the 100-day EMA at around 106.40. The Bollinger Bands indicate strong upside momentum, as the price tracks above the rising middle band, while the upper band continues to expand, reflecting heightened volatility and room for further gains.
The daily RSI hovers in the low 60s, remaining in positive territory without entering overbought extremes, supporting sustained buying pressure rather than a temporary spike.
Immediate resistance is established at 113.70, with a break above this level potentially opening the door toward 115.00, a key psychological and technical zone. Support levels are at 111.40 from the Bollinger middle band, followed by the 110.15–110.35 zone, aligned with prior consolidation and mid-October band clusters.
A deeper pullback could target 108.70, just above the 100-day EMA, where trend support coincides with the lower Bollinger structure. A breach below this area would jeopardize the current bullish setup.
NZD/USD Outlook Ahead of US NFP
For NZD/USD, the broader technical picture suggests that the pair is consolidating above 0.5600, holding on to modest recovery gains. Short-term movements will likely be influenced by the upcoming US NFP release, as labor market strength could underpin the USD, potentially limiting the NZD’s upside.
Traders should monitor key levels: immediate resistance near 0.5650–0.5660, while support is observed at 0.5580–0.5560. A break above resistance could accelerate the upward recovery, whereas a drop below support might indicate renewed USD strength and pressure on the NZD/USD pair.
Conclusion
The AUD/JPY cross and NZD/USD both demonstrate resilience in the face of geopolitical risk and macroeconomic developments. For AUD/JPY, the bullish technical setup remains intact above the 100-day EMA, while RSI momentum supports continued upside potential toward 113.70–115.00.
For NZD/USD, modest recovery gains above 0.5600 persist, but the market is likely to be volatile ahead of the US NFP report. Traders should pay attention to employment data, central bank guidance, and geopolitical developments, which could quickly reshape risk sentiment and influence short-term price trajectories.