Australian Dollar Vulnerable to Consolidation Amid Renewed Hike Bets

The Australian dollar maintains its upper hand in various currency pairs due to renewed bets of Reserve Bank of Australia (RBA) hikes and relatively stable domestic fundamentals. However, short-term momentum is stretched, making the Aussie potentially vulnerable to consolidation, which could lead to rebounds in the New Zealand dollar (NZD), British pound (GBP), and euro (EUR).

AUD/NZD is testing a potential bullish breakout, while GBP/AUD and EUR/AUD remain under downward pressure despite signs of possible retracement higher. The Bank of England's hawkish hold and soft UK labour market have provided an ideal divergent theme for GBP/AUD bears.

The weekly charts show a strong uptrend in AUD/NZD with a potential falling wedge breakout, which could project an upside target near the cycle highs. However, the pattern is not assumed to be a support or resistance level and may require a pullback towards the weekly pivot point or 10- and 20-day Exponential Moving Averages (EMAs).

The RBNZ's expected hawkish hike tomorrow could help AUD/NZD pull back further, while a lack of hawkish tone could aid in breaking higher sooner. The EUR/AUD weekly chart suggests a dominant downtrend with rising bearish volatility and prices holding above support for now.