SYDNEY/WELLINGTON: The Australian dollar took a breather on Tuesday after striking a fresh 29-year high overnight, as its recent rapid run left it overbought in the short term and facing strong chart resistance against the yen.
The Australian dollar consolidated at around $1.0256, after hitting a peak of $1.0315 offshore on Monday. The currency has benefited from considerable momentum, having gained nearly 6 cents in just 11 days, but lost some steam due to weaker metal prices and profit-taking, according to a trader.
Some analysts said the Aussie could drift back towards the $1.00-$1.02 range.
"Fundamental conditions and valuations are not strong enough for the Australian dollar to extend higher from here. Global conditions and risk factors have in fact deteriorated somewhat over recent months," Greg Gibbs, strategist at RBS said.
For now, support for the Aussie is seen at Monday's low of $1.0225 with resistance at $1.0282, $1.0315 and $1.0400.
In New Zealand, the kiwi firmed at around $0.7514 in late trade. It also made a fast recovery, up four cents since its nosedive in the wake of Japan's massive earthquake mid-March. Support remained strong at the March 11 high of $0.7457 while resistance was at $0.7583 ahead of $0.7607.
Similarly to the Aussie, analysts doubt the kiwi, which has gained 2 percent in the past week, will be able to go further.
"We find it difficult to identify a possible trigger to send the currency substantially higher," said Bank of New Zealand strategist Mike Jones.
He also said speculative positioning appeared more balanced, with financial markets expecting only one rate hike by the Reserve Bank of New Zealand over the next 12 months.
The Antipodean currencies pulled back from a month-high on the yen as some investors closed their positions for the Japanese year-end in March.
The Aussie edged back to 83.73 yen, from a five-week high at 84.23 on Monday. The currency faces tough resistance at the 200-week moving average of 84.17, but a break would be very bullish technically. The kiwi fell to 61.38 yen, having gained a whopping 12 percent since March 17.
The Aussie ran out of puff against the kiwi at NZ$1.3639, off a two-week high of NZ$1.3726 on Monday.
New Zealand's February trade data showed little impact from the devastating Christchurch earthquake as the monthly trade balance posted its first surplus in eight months, driven by dairy exports. Analysts said more visible impacts are likely in domestic spending measures over coming months.
The NZ government debt was steady, with prices firm in the front end, while Australian bond futures gained. The three-year contract
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