AUD/NZD: Bullish en route towards a 10-year high at 1.1470 with a less dovish RBA

[Redator]

Key takeaways

• RBA steady, RBNZ dovish tilt: Australia’s central bank is expected to hold rates at 3.6%, while New Zealand’s weak labour market raises the odds of a more dovish RBNZ stance.
• Widening yield spreads: The 2-year and 10-year AU/NZ sovereign bond yield spreads are likely to widen further, favouring AUD strength over NZD.
• AUD/NZD strength: The cross pair has gained 5.8% since July 2025, hitting a three-year high of 1.1390, supported by relative macro and yield dynamics.
• Technical outlook bullish: Short-term bias stays positive for AUD/NZD above 1.1330 support, with scope to test 1.1435 and the long-term secular resistance at 1.1470.

Australia’s central bank (RBA) is expected to keep its policy cash rate unchanged at 3.6% in today’s (30 September) monetary policy meeting after a third cut this year in August that marked a cumulative 75 basis points reduction.

Australia’s labour market remains tight, while renewed inflationary pressures have emerged. The monthly CPI indicator climbed to 3% y/y in August 2025, its highest reading since July 2024, up from 2.8% in the prior month.

The AUD/NZD cross pair has exhibited a multi-month Aussie outperformance over the Kiwi, where it rose by 5.8% since the July 2025 low of 1.0766 to hit a three-year high at 1.1390 at the time of writing.

Let’s now examine a macro factor that still supports a continuation of strength in the AUD/NZD.

A soft New Zealand labour market may trigger a further steepening of the AU/NZ sovereign bonds' yield spread

Fig. 1: AU & NZ unemployment rate with yield spreads of AU/NZ government bonds as of 30 Sep 2025 (Source: TradingView)

New Zealand's unemployment rate has accelerated to 5.2% in the three months through June 2025, its highest level since Q3 2020 during the onset of the pandemic.

In contrast, Australia’s monthly unemployment rate for August 2025 slipped to 4.2% from 4.3% in July.

The bleak labour market conditions in New Zealand increase the likelihood that the RBNZ will adopt a relatively more dovish monetary policy stance in the remaining months of 2025 compared to the RBA.

The 2-year and 10-year yield spreads between Australian and New Zealand sovereign bonds are likely to widen further, which in turn could fuel additional upside pressure on the AUD/NZD cross rates (see Fig. 1).

We will now focus on the short-term (1to 3 days) trajectory, key elements, and key levels to watch on the AUD/NZD from a technical analysis perspective.

Fig. 2: AUD/NZD minor trend as of 30 Sep 2025 (Source: TradingView)

Fig. 3: AUD/NZD long-term secular trend as of 30 Sep 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

Bullish with key short-term pivotal support at 1.1330 on the AUD/NZD for the next intermediate resistance to come in at 1.1435 before a test on the 1.1470 long-term secular resistance (also a Fibonacci extension) (see Fig. 2).

Key elements

• The price actions of the AUD/NZD have continued to oscillate within a minor ascending channel in place since the 18 September 2025 low of 1.1151 (see Fig. 2).
• The hourly RSI momentum indicator of the AUD/NZD has reached its overbought zone (above the 70 level), but it has not flashed out any bearish divergence condition. This observation suggests low odds of a bearish reversal for AUD/NZD (see Fig. 2).
• The 1.1470 long-term secular resistance of the AUD/NZD is defined as the upper limit of a 10-year-plus bullish basing configuration in place since April 2015 (see Fig. 3).
• In addition, the monthly MACD trend indicator of the AUD/NZD has managed to stage a rebound after a test of its ascending channel support right above the centreline. This observation suggests the potential start of a long-term secular bullish trend for the AUD/NZD, which increases the odds of a major bullish breakout above 1.1470 (see Fig. 3).

Alternative trend bias (1 to 3 days)

A break below the 1.1330 key short-term support for AUD/NZD invalidates the bullish scenario to kickstart a minor corrective decline sequence to expose the next intermediate supports at 1.1270 and 1.1205 (also the 20-day moving average).

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