AUD/NZD sees slight uptick ahead of RBNZ decision, hawkish RBA

• AUD/NZD saw a mild increase in Tuesday's session but cleared most of its gains.
• RBNZ decision comes up later in the Asian session with a hold priced in.
• The RBA maintains its hawkish tone, promoting a more favorable outlook for the Aussie.

After a climb to the highest level since early May, the AUD/NZD buyers have cleared some gains and the pair faces some consolidation. The market awaits the Reserve Bank of New Zealand (RBNZ) decision later on Tuesday where the Official Cash Rate (OCR) is expected to be maintained at 5.50%.

Despite markets betting on a 60% probability of a rate hike by the end of the year, as suggested in the RBNZ’s May rate path projection, the disinflationary process brought on by New Zealand’s sluggish growth outlook leans the market towards an early rate cut in October, with a November cut fully priced in. In that sense, the Monetary Policy Statement for any possible insights will be closely looked at.

On the other hand, in Australia, the latest hot inflation data has increased market expectations, suggesting high chances of a 25 bps rate hike at the Reserve Bank of Australia (RBA)'s September 24 meeting, which rises to nearly 50% by November 5. Other than the RBNZ decision there won’t be any significant highlight the bank’s decision will dictate the pace of the pair for the rest of the week.

AUD/NZD technical analysis

Short-term, the AUD/NZD maintains a bullish stance clarified by the recent gains. However, nearing overbought conditions suggests the potential for a correction. The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) both indicate that a correction may be looming as buyers lose steam.

Support levels continue to lie at 1.1000, 1.0950, and 1.0930. The 1.1000 target remains the next task for the buyers to retain.

AUD/NZD daily chart