AUD/NZD plummets after March Australian GDP numbers

• On Wednesday, AUD/NZD fell significantly, reaching its lowest level since March around 1.0740.
• Australia’s first quarter GDP growth came in below expectations, signaling a slowdown in the economy.

He AUD/NZD continued its bearish trajectory on Wednesday, falling to its lowest level since March, recorded around 1.0740 amid Australia’s newly released first-quarter Gross Domestic Product (GDP) data.

In Australia, first quarter GDP figures were reported slightly below market expectations, with sluggish growth of 0.1% quarter-on-quarter below the 0.2% forecast, indicating a moderate pace in the economy. In addition, the interannual rate stood at 1.1%, lower than the projected figure and below the 1.6% corrected in the fourth quarter of the previous year. Additionally, recent services and composite PMI readings for May appeared weaker than preliminary estimates.

Despite these developments, the RBA, led by Governor Michele Bullock, will likely maintain its focus on bringing inflation back to its target. In that sense, future monetary policy decisions will likely be more influenced by this objective rather than short-term economic swings. Although tightening monetary policy was a point of discussion at the last meeting, investors dismissed those odds and for the next meeting in June they only see about a 30% chance of a cut.

AUD/NZD technical analysis

The technical outlook has deepened further into bearish territory. However, the daily RSI showed oversold conditions, indicating that a possible upward correction could be on the horizon. This is supported by the Moving Average Convergence/Divergence (MACD), which shows a reduction in the red bars, confirming the potential for an uptrend.

As the downtrend persists with the pair below its 20-, 100-, and 200-day SMAs and at multi-month lows, the focus will be on whether the downtrend continues or an upward correction occurs.

AUD/NZD daily chart