NZDUSD enjoyed a bit of support in recent trading sessions, as traders squared away their risk-off positions. The pair bounced off the bottom of its range around the .6250 minor psychological mark and might make its way back to the top around the .6400 major psychological level.
For now, price is encountering a bit of resistance at the mid-channel area of interest, which might be strong enough to send the pair back down to the bottom of the range. The 100 SMA is below the 200 SMA, suggesting that the path of least resistance is to the downside and that a breakdown of support might even be possible.
Stochastic and RSI are also on the move down, indicating that selling pressure is building up. A break below support could spur a 150-pip drop, which is roughly the same size as the chart formation.
Data from New Zealand has been positive recently, as Fonterra announced an increase in its milk payout forecasts. This could mean higher revenues for farmers and producers, possibly leading to a boost in production later on. Aside from that, the country’s trade balance also indicated green shoots for both imports and exports even though headline figures missed expectations.
In the US, hawkish remarks from Fed officials have been propping up the dollar this week, as Fed Chairperson Yellen confirmed that a rate hike is likely before the end of the year. Just as the other FOMC members Williams and Lockhart, she pointed out that labor market improvements have been impressive but that inflation has been subdued.
Data from the US came in mixed, with new home sales exceeding expectations and durable goods orders data falling short. Event risks for this trade today include the release of the US final GDP reading for Q2 and the revised UoM consumer sentiment index for August.
By Kate Curtis from Trader’s Way