Both the Aussie and the kiwi fell to deep lows, and made an impressive comeback from these lows. On the daily charts, this looks like a hammer pattern, which indicates the beginning of a big recovery.
In the case of the kiwi, there are no real reasons for diving lower, but for the Aussie, this could be a necessary correction before the next plunge.
AUD/USD
AUD/USD dropped to a near-three-year low, breaking below 0.9388 and reaching levels last seen in September 2010. The pair fell as low as 0.9325, but began a steady recovery from there, trading around a 100 pips higher since then.
The Aussie certainly has reasons to fall: the end of the mining boom (or perception of), lower Chinese growth, weaker economy outside the mining sector and weaker forecasts from practically everybody.
In addition, AUD/USD already encountered hammer patterns on the daily chart, only to recover swiftly. Note the hammer seen at the left side of the graph:
NZD/USD
Kiwi/dollar fell below 0.78 and found itself as low as 77.60, the lowest in a year. Yet again, it made a big recovery from there, topping 0.7880 (over 120 pips) before trading at 0.7870 at the time of writing.
In the case of the kiwi, the economy remains stable and the weaker currency is certainly desired in order to maintain the momentum. However, dropping much lower isn’t warranted: the economy is doing well, and the currency met long-term uptrend support.
More on the Aussie:
- The next levels for the Aussie down under
- Weekly Australian dollar forecast
