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AUD/NZD Breaks Trendline after RBA Cuts Rate

The Reserve Bank of Australia cut its official cash rate to 2.25% from 2.50%. This was not completely expected, but was not a surprise neither because many central banks have been turning dovish, cutting rates, and increasing stimulus. Other than that, Glenn Stevens noted disinflationary pressure and weak domestic demand and primary reasons for the rate cut.

Last week, the RBNZ held its official cash rate at 3.50%, but sound dovish. The AUD/NZD popped to a high of 1.0795 after that. It then consolidated, and the reaction to today's RBA rate cut sent it below 2015's rising trendline.

AUD/NZD 4H Chart 2/3

(click to enlarge)

The 4H chart shows the breakdown of the trendline, but also shows that the market is still bullish-neutral. The breakdown  has turned the market a bit sideways, but it still needs to break below 1.0550 and the 4H RSI needs to break below 40, before the bearish outlook emerges. 

If price can push back above 1.07, there would be upside pressure towards the 1.0795-1.08 area.