AUD/NZD Rally Set to Continue After Hitting 13-Year High

Key Takeaways

• The AUD/NZD currency pair is in a strong medium-term uptrend, recently reaching a 13-year high.
• This trend is supported by widening bond yield spreads between Australia and New Zealand, alongside a more hawkish stance from the Reserve Bank of Australia (RBA) compared to the Reserve Bank of New Zealand (RBNZ).
• Market expectations indicate a "hawkish hold" from the RBNZ at 2.25%, while the RBA is anticipated to pursue a more aggressive tightening path due to ongoing inflation pressures.
• Technical analysis suggests that the AUD/NZD could break out above 1.2250, with potential targets at 1.2310 and 1.2380/2400.

Upcoming RBNZ Monetary Policy Decision

The RBNZ is scheduled to announce its monetary policy decision on 27 May 2026, with expectations to maintain the official cash rate at 2.25%. This follows a "wait and see" approach since the end of its interest rate cut cycle in November 2026, primarily due to stagflation risks linked to the US-Iran conflict.

Market participants are fully pricing in a 25-basis point hike in September, with additional hikes anticipated in Q4 2026, reflecting a hawkish outlook despite the RBNZ's current stance.

Comparative Analysis: RBA vs. RBNZ

The RBA has already implemented three rate hikes in 2026, totaling 75 basis points, positioning it ahead of the RBNZ in terms of monetary policy tightening. The bond yield spreads between Australian and New Zealand sovereign bonds have shown a significant uptrend, indicating a growing yield premium for Australian bonds.

As of 26 May 2026, the 2-year bond yield spread has rebounded to 1.07%, while the 10-year bond yield spread remains resilient at 0.28%, both near multi-year highs. This trend is likely to exert upward pressure on the AUD/NZD exchange rate.

Technical Analysis of AUD/NZD

The AUD/NZD pair is expected to maintain a bullish bias above the key support level of 1.2130. Key resistance levels to watch include:

• 1.2250 - Minor swing high from 15 May 2026
• 1.2310 - Fibonacci extension level
• 1.2380/2400 - Fibonacci extension and upper boundary of the ascending channel

Support levels are identified at 1.2050 and 1.1990. The pair has consistently traded above its 20-day and 50-day moving averages since February 2026, reinforcing the medium-term uptrend.

The 4-hour RSI momentum indicator has recently broken out from a descending resistance, indicating sustained bullish momentum without any bearish divergence signals.