AUD/NZD tumbles after Australian GDP data reaches lows since March

• On Wednesday, the AUD/NZD dropped significantly, reaching its lowest level since March around 1.0740.
• Australian Q1 GDP growth was reported slightly below expectations, signaling a slowdown in the economy.
• The RBA is set to keep an eye on inflation, which might be the primary focus for monetary policy decisions.

The AUD/NZD continued its bearish trajectory on Wednesday, declining to its lowest level since March, registered at around 1.0740 amid the newly released Australian Gross Domestic Product (GDP) Q1 data.

In Australia, reported Q1 GDP figures came in slightly below market anticipations, with sluggish growth of 0.1% QoQ below the predicted 0.2%, indicating a moderated pace in the economy. Also, the YoY rate landed at 1.1%, lower than the projected figure and down from the corrected 1.6% in Q4 of the previous year. Furthermore, recent services and composite PMI readings for May appeared softer than preliminary estimates.

Despite these developments, the RBA, accentuated by Governor Michele Bullock, is likely to maintain its attention on bringing inflation back to its target. In that sense, future monetary policy decisions are probably more influenced by this goal rather than short-term economic oscillations. While tightening monetary policy was a point of discussion in the last meeting, investors took those off the table those odds and for the next meeting in June are just seeing around 30% odds of a cut.

AUD/NZD technical analysis

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

As the bearish trend persists with the pair below its 20,100 and 200-day Simple Moving Averages (SMAs) and in multi-month lows, the focus will be whether the downward trend continues or an upward correction happens.

AUD/NZD daily chart