NZDUSD has been trending higher on its longer-term charts, moving inside an ascending channel on its daily time frame. Price just bounced off the support and seems to have its sights set on the top of the range at .7200.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the 100 SMA has held as dynamic support. Stochastic is on the move up which means that buyers are in control of price action but RSI appears to be turning down from the overbought area to indicate a return in bearish momentum.
If so, NZDUSD could retreat to the channel support around the .6700 level. Stronger selling pressure could trigger a downside break, although the dynamic inflection point at the 200 SMA could still keep losses in check.
Event risks for this setup this week include the RBNZ statement, although no actual policy changes are expected. Data from the New Zealand economy has shown some improvement, particularly when it comes to the dairy industry. The latest GDT auction has yielded a stronger 3.8% gain in dairy prices while exports have rebounded.
As for the US dollar, the NFP release on Friday turned out much weaker than expected with a meager 38K increase in hiring. This led to weaker expectations of a rate hike for June or July, spurring a sharp decline for the US dollar.
Fed Chairperson Yellen has a testimony lined up today and traders are eager to see how she reacts to the latest NFP disappointment. A return to her usual set of cautious remarks could push the dollar lower while words of reassurance could allow the currency to regain some ground.
To contact the reporter of the story: Samuel Rae at firstname.lastname@example.org
About: Forexminute - Samuel Rae
- ^ For free forex trade signals, sign up on Trade24 here (links.trade-24.com)
Source ↔ Download MP3 Free