Australian Dollar cools off against the New Zealand Dollar before jobs data

The Australian Dollar (AUD) has shown a slight decline against the New Zealand Dollar (NZD) prior to the release of Australian employment data on Thursday. The peak of the AUD/NZD pair reached just below 1.2500 on Tuesday, marking the highest level since early 2013. Currently, the pair is trading just above 1.2400, on track for a second consecutive down day.

The difference in interest rates between the two countries is contributing to the spread, with the RBA's cash rate at 4.35% and expected to rise to 4.60% on September 29, while the RBNZ's rate stands at 2.75% with no forecasted change. The Reserve Bank of Australia's (RBA) upcoming employment report is scheduled for Thursday at 01:30 GMT, with an anticipated job gain of 20K and a steady jobless rate of 4.5%.

A positive result in the report will likely maintain expectations for the September 29 rate hike, while a weaker outcome may raise concerns about the hike. NZD has no data forthcoming before the weekend. A strong employment report could confirm the existing gap between the two currencies, while a softer report might cast doubt on the hike.

The resistance level is capped at 1.2450, as Wednesday's bounce was capped. The previous high of Tuesday (just under 1.2500) represents the next hurdle, and the level was not reached since early 2013. Support is currently found at the 1.2400 area, which has held the pair's dip so far, following Tuesday's low just below this level.

Support levels drop further at 1.2350 and then 1.2300, the old ceiling that capped the pair in early September before it broke higher on September 8. Technical analysis suggests a cautious short position below 1.2450, aiming for a pullback to 1.2350 and then 1.2300 rather than a trend reversal. The daily Stochastic Relative Strength Index (Stoch RSI) has turned down from its peak and is currently near 89, indicating a potential short opportunity if the price closes above 1.2500.