AUD/NZD’s medium-term uptrend resumed this week, lifting the cross to its highest level since 2013. The move extends a rally that began in mid-2025 and reflects widening policy divergence between the RBA and RBNZ.
The initial leg higher was driven by aggressive rate cuts from RBNZ, which pushed the OCR down to 2.25% and weakened Kiwi across the board. Momentum then re-accelerated earlier this month after RBA reversed course and resumed tightening, lifting the cash rate to 3.85%.
Fresh upside impetus came from disappointment over RBNZ’s policy hold this week. While projections showed a slightly higher future rate path, markets had hoped for a clearer hawkish signal.
Realistically, RBNZ may deliver at most one hike by year-end from current levels, with the OCR only slowly moving toward the estimated neutral rate near 3.00% by late 2027. That path contrasts sharply with Australia’s more immediate tightening bias.
Today’s robust Australian jobs data strengthened the divergence narrative. RBA remains on track for another hike in May. If inflation proves sticky and labor conditions fail to ease, risk of further tightening beyond May cannot be ruled out.
Technically, AUD/NZD is now targeting the 61.8% projection of 1.0795 to 1.1634 from 1.1412 at 1.1931. In any case, outlook will remain bullish as long as 1.1634 resistance turned support holds.
Momentum could carry the pair through the 1.20 handle, but upside may begin to fade as positioning becomes stretched. The broader medium-term hurdle sits at the 100% projection of 0.9992 (2020 low) to 1.1489 (2022 high) from 1.0649 (2025 low) at 1.2146.
Even with another RBA hike, clearing that barrier at 1.2146 decisively would require a more material shift in central bank outlooks, which is unlikely for now. On the other hand, a topping formation between 1.2000 and 1.2146 would be likely, in particular, if RBNZ’s tightening timeline accelerates unexpectedly or if Australian data begin to soften materially.
