The Australian dollar continues to see a bit of bullish pressure against the New Zealand dollar, as we are looking at the market through the interest rate differential and the outlook for the RBA.
The Australian dollar rallied against the New Zealand dollar during trading on Friday as we continue to see the overall uptrend play out. Keep in mind that the interest-rate differential continues to favor the Australian dollar over the New Zealand dollar, and the Reserve Bank of Australia has recently made comments suggesting that perhaps it could be a bit hawkish. With that, it is likely that the Australian dollar continues to be somewhat sought after.
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Technically bullish looking
When you look at the technical analysis, this looks a lot like a bullish flag playing out. The measured move could be pretty big. A short-term pullback at this point could open up the possibility of testing the 1.23 level. The 1.23 level is an area that had been previous resistance; market memory comes into the picture, and people start to look at it through that prism. This remains as a situation where people look at this as a market that will continue to act via market memory, support, and resistance, as well as the fact that we are getting paid at the end of each session.
All things being equal, I do like buying this pair, but I recognize that it is a slow grind most of the time, so this is not something that plays out quickly. It is something that takes a while to really get going, and with this, I believe you have to assume that traders will look at each dip as an opportunity to take advantage of cheap Australian dollars and another opportunity to punish the New Zealand dollar.
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