Chart alert: AUD/NZD rally set to continue after hitting 13-year high

• AUD/NZD remains in a firm medium-term uptrend after hitting a fresh 13-year high, supported by widening Australian-New Zealand bond yield spreads and stronger RBA hawkishness versus the RBNZ.
• Markets expect the RBNZ to deliver a “hawkish hold” at 2.25%, but investors continue to price in a relatively more aggressive tightening path from the RBA amid persistent inflation pressures.
• Technical indicators suggest bullish momentum remains intact above 1.2130 support, with AUD/NZD poised for a potential breakout above 1.2250 toward 1.2310 and 1.2380/2400.

New Zealand’s central bank, RBNZ, is set to announce its monetary policy decision tomorrow, Wednesday, 27 May 2026, at 10:00 SGT follow by RBNZ Governor Breman’s press conference an hour later.

Market participants are expecting the RBNZ to hold its official cash rate at 2.25% tomorrow. The RBNZ has adopted a “wait and see” approach since it ended its interest rate cut cycle in November 2026, citing stagflation risk arising from the US-Iran war in the last meeting in April.

The RBNZ will also publish its latest official cash rate (OCR) forecast track in Wednesday’s monetary policy release, with money markets fully pricing in a 25-basis point hike in September and further bets on the possibility of two more hikes of 25 bps each to come in Q4 2026.

Hence, it is a “hawkish hold” for RBNZ after tomorrow’s meeting, given that the Q1 2026 core inflation rate in New Zealand came in at 3.2% y/y, staying above RBNZ’s 1%-3% long-term inflation target.

Despite the RBNZ’s potential “hawkish hold” monetary policy guidance, it still lags behind its antipodean cousin, the RBA (Australian central bank). So far, RBA has three times in 2026, a total of 75 bps.

Fixed-income markets have continued to price in a more hawkish RBA over RBNZ.

The 2-year bond yield spread (highly sensitive to shifts in monetary policies) between Australian and New Zealand sovereign bonds has continued its trade within a major uptrend phase since October 2023. Recent price actions have staged a rebound to 1.07% from 0.99% printed in the week of 18 May 2026 (see Fig. 1).

Similar movement can be seen in the longer-term 10-year bond yield spread (more sensitive to inflation dynamics) between Australian and New Zealand sovereign bonds, which have remained resilient at 0.28%, trading at a near 6-year high.

Hence, a further expansion in the yield premium of Australian sovereign bonds over New Zealand bonds is likely to put further upside pressure on the AUD/NZD cross rate.

Let’s now unpack the medium-term (1 to 3 weeks) potential trajectory of the AUD/NZD from a technical analysis perspective.

Trend bias: Bullish bias above 1.2130 key medium-term pivotal support (Fig. 2).

Resistances: 1.2250 (15 May 2026 minor swing high), 1.2310 (Fibonacci extension), and 1.2380/2400 (Fibonacci extension, ascending channel’s upper boundary, 11 August 2011/2 October 2012 former range support)

Next supports: 1.2050 (9 April/14 April 2026 swing lows), and 1.1990 (25 March/31 March 2026 former minor range resistance)

• The price actions of the AUD/NZD have continued to trade above its 20-day and 50-day moving averages since 4 February 2026, suggesting that its medium-term uptrend phase remains intact.
• The 4-hour RSI momentum indicator has just staged a bullish breakout from a key descending resistance, reached its overbought region (above the 70 level) but without any bearish divergence signal. These observations imply that medium-term bullish momentum conditions remain intact.

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