1.2490 Area: Aussie May Test Support Near Previous Highs | AUD/NZD Price Forecast

• 1.2520 is back in focus for AUD/USD. The pair has retreated towards that level after surging above 1.2600 to a 13-year high.
• An RBNZ decision to keep interest rates unchanged sent the Kiwi sharply lower across the board.
• Across most timeframes, the pair is now in overbought territory.

1.2600 marked the area of AUD/NZD’s multi-decade highs. On Wednesday, the Australian Dollar (AUD) is advancing strongly against a weak New Zealand Dollar (NZD) after the Reserve Bank of New Zealand (RBNZ) unexpectedly paused at its monetary policy meeting. However, the surge has left the pair deeply overbought. During the Asian session, it has retreated towards the former resistance zone around 1.2490.

Markets had anticipated a quarter-point rate increase, but the RBNZ kept its Official Cash Rate (OCR) at 2.75% earlier on Wednesday. The decision triggered broad-based losses in the Kiwi Dollar. Some of those losses were recovered shortly afterwards as Governor Anna Breman signalled further monetary tightening in December.

Australian Consumer Price Index (CPI) figures published earlier in the day gave the Aussie further support. Inflation picked up from 0.4% in August to 0.8% in September, while the annual CPI reading increased from the previous month’s 4% to 4.3%.

The Reserve Bank of Australia (RBA) Trimmed Mean CPI also increased, reaching 1% for the quarter from 0.8%. Compared with the same quarter last year, it held at 3.6%. The readings put additional pressure on the central bank to deliver its fifth rate increase this year at next week’s monetary policy meeting.

RSI near 80: Technical analysis points to risk of a deeper correction

A breakout above the horizontal range of the past seven weeks has taken AUD/NZD sharply higher. That move has lifted the 4-hour Relative Strength Index (14) close to 80, a deeply overbought reading often followed by a correction.

Positive readings in the Moving Average Convergence Divergence (MACD) histogram indicate that near-term momentum remains constructive. Buying momentum has nevertheless faded. Before extending its advance, the pair could revisit support around 1.2490, the top of its former range.

Should the pullback deepen, attention would turn first to the lows of 21, 22 and 26 October around 1.2370. Beyond those lies the key support zone at 1.2275, marked by the lows of 10 September and 16 October.

For buyers, the session high of 1.2609 is likely to present a test. Above that, 1.2642 looks a plausible target, corresponding to the 127.2% Fibonacci extension of the August-September advance.

(The technical analysis of this story was written with the help of an AI tool. Know more.)