AUD Strength Tests Limits as NZD, GBP, and EUR Pairs Seek Rebound Opportunities

The Australian dollar has maintained its strength across several currency pairs due to renewed bets of Reserve Bank of Australia (RBA) interest rate hikes and relatively stable domestic fundamentals. However, the AUD's short-term momentum is becoming overstretched, potentially leading to some consolidation before the broader trends reassert themselves.

AUD/NZD is testing a potential bullish breakout, while GBP/AUD and EUR/AUD remain under pressure despite signs of near-term retracement opportunities. The weekly chart for AUD/NZD shows a strong uptrend with a falling wedge pattern, which could project an upside target near the cycle highs if successful.

However, the pattern's lines are not assumed support and resistance levels, and bulls may be losing steam, indicated by a spinning-top doji on Monday. A pullback towards the weekly pivot point or 10- and 20-day EMAs could occur, but if the falling wedge holds true, AUD/NZD may break higher and head for 1.22.

The RBNZ's expected hawkish hike tomorrow could help AUD/NZD pull back further, while a lack of hawkish tone could see the pair break higher sooner. GBP/AUD remains in a downtrend, with bears seeking to fade moves towards resistance levels such as the weekly pivot point and 10-day EMA.

EUR/AUD wants to break lower but near-term risks are skewed to the upside, with prices holding above support for now. A bullish engulfing candle formed on Monday, but bears may seek to fade into moves towards resistance levels in anticipation of a break of the March low and potential move down to 1.60.