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AUD/USD Consolidates; AUD/NZD Slides to Fresh Lows

The AUD/USD has been consolidating in February, taking a breather amid a persistent downtrend. Based on the prevailing winds, we should expect the AUD/USD to break to the downside. It is currently ranging between 0.7626 and 0.7876. Last week, there was a failed attempt to test the 0.7626 level, and now price looks poised to test the 0.7876 resistance. 

AUD/USD Daily Chart 2/16

(click to enlarge)

We should expect it to hold because of the bearish bias, but even if it breaks, the bearish outlook is still valid. We should limit the bullish outlook to the 0.80-0.8050 area, and expect sellers here based on it being a previous support/resistance pivot area, reinforced by a falling trendline and the 50-day SMAs. 

The weakness of the Aussie is in full display in the AUD/NZD pair. The RBA has already cut its official cash rate to a record low of 2.25. Glenn Stevens continues to point out that the AUD is overvalued. Furthermore, we saw disappointing employment data for January released last Friday. The AUD/NZD fell below its previous record low at 1.0353. It is now a strong break just yet, but the signs are there for further downside.

If there is a pullback, we should expecte sellers in the 1.05-1.06 area, which is a support/resistance pivot area.

AUD/NZD Daily Chart 2/16
(click to enlarge)