AUD/NZD tumbled sharply today as markets digested two major releases: RBNZ’s widely expected 25bps cut and Australia’s stronger-than-forecast CPI print. Despite the upside surprise on inflation, AUD buying was no match for the hawkish tone embedded in RBNZ’s announcement, which effectively signaled that the easing cycle is now complete.
That distinction proved decisive. With RBNZ projecting the OCR to bottom near current levels and rise gradually into 2027, the case for deeper easing has evaporated. Although the RBA is also expected to stay on hold through early 2026, the interest-rate differential is now set to remain stable rather than widening. Investors who previously bet on wider divergence, a trend accelerated by New Zealand’s sharp Q2 economic contraction, are now unwinding positions.
Technically, AUD/NZD’s break of 1.1452 support confirms resumption of the decline from 1.1634 short term top. Considering bearish divergence condition in D MACD, fall from 1.1634 is likely correcting rise from 1.0724. Deeper fall should be seen to 55 D EMA (now at 1.1367) and possibly below.
But strong support is expected from 1.1275 cluster (38.2% retracement of 1.0724 to 1.1634 at 1.1286) to bring rebound and set the range for sideway trading.
Rise from 1.0649 is still expected to have another rising leg through 1.1634 to complete a five-wave impulsive pattern. But that’s unlikely to happen soon. The move may only come when the markets start to bet that RBA would hike interest rate earlier than RBNZ, which won’t be in the near future.
That next leg, however, would require a significant shift in rate expectations—specifically, a scenario where markets begin to see the RBA tightening earlier than RBNZ, which is not on the horizon at present.
