AUD/NZD drops to 4-month low

The AUD/NZD pair fell to a 4-month low of 1.0455 after China Caixin printed at an 11-month low of 49.6 in May.

Oversold RSI

This is the one pair the Aussie bears need to be careful as the daily RSI is oversold. Though RSI isn’t the Holy Grail, it could limit the downside, hence caution is advised.

The 10-year Aussie bond yield currently trades 1.1 basis points (bps) lower on the day at 2.38%. The yield had jumped to a high of 2.424% earlier today on strong Aussie retail sales figure.

The cross may extend losses during the day ahead if the markets in Europe and US turn risk averse in response to weak China data.

AUD/NZD Technical Levels

A break below 1.0428 (Feb 8 low) would expose 1.04 (zero levels) and 1.0375 (Dec 14 low). On the other hand, a break above 1.0509 (5-DMA) would open up upside towards 1.0572 (Jan 11 high) and 1.06 (zero levels).