AUD/NZD forms a rising wedge pattern as Australia retail sales slip

The AUD/NZD exchange rate drifted upwards on Tuesday morning after the latest Australian retail sales data. It rose to a high of 1.0745, the highest level since March 23. It has jumped by ~0.57% from the lowest level this month. 

Australia retail sales data 

Numbers by the Australian Bureau of Statistics (ABS) showed that the country’s retail sales rose by 0.2% in February after rising by 1.8% in the previous month. That increase was better than the median estimate of 0.1%. It was also the second consecutive month of positive sales in the country. 

The sharp decline in retail sales growth means that customers are being affected by the relatively elevated inflation levels. The total volume of sales came in at A$35 billion, which is the same value it was in September last year. Australia’s population has grown during this period, meaning that retail sales are not doing well. 

Australia’s retail sales numbers came a day before the ABS is set to publish the latest consumer inflation data from the country. Economists polled by Reuters expect the data to show that the headline consumer inflation dropped from 7.4% in January to 7.1% in February. That figure is still much higher than the RBA target of 2%.

RBA minutes published last week showed that the committee was considering pausing its interest rates hikes in the coming meetings. The strategic pause will help it assess the impact of past interest rate hikes. 

There will be no major economic data from New Zealand this week. The only ones scheduled are business consent and business confidence which will come out on Thursday. Their impact on the AUD/NZD pair will be relatively muted. 

AUD/NZD technical analysis 

AUD/NZD chart by TradingView

The AUD to NZD exchange rate found a strong support at 1.0675 in March where it failed to move below three times. On the four-hour chart, the pair has managed to move slightly above the 25-day and 50-day moving averages and is slightly below the 23.6% Fibonacci retracement level.

The pair seems to be forming a rising wedge pattern that is shown in black. Therefore, the pair will likely have a bearish breakout as sellers target the next key support at 1.0675. A break below that support will open the possibility of the pair dropping to 1.0600.