Daily Asia-London Sessions Watchlist: NZD/USD

National Financial Solution > Forex Trading > Daily Asia-London Sessions Watchlist: NZD/USD

With no major economic catalysts expected around the corner, we’re checking out this technical setup on NZD/USD that could draw in momentum traders in the short-term.

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a swift move lower in EUR/NZD, so be sure to check that out to see if there is still a potential play!

Intermarket Update:

Equity Markets Bond Yields Commodities & Crypto
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Fresh Market Headlines & Economic Data:

S&P 500 ekes out a small gain in light trading, boosted by reopening plays

U.S. mortgage applications tick down as refinance activity declines -MBA

Fed’s Quarles signals open to talks on bond program

Oil edges up as rising demand faces Iran supply worries

ECB’s Panetta sees no justification for slowing bond-buying

Upcoming Potential Catalysts on the Economic Calendar

Bank of Korea Interest Rate decision at 1:00 am GMT (May 27)
Australia Private Capital Expenditure at 1:30 am GMT (May 27)
Swiss Trade Balance at 6:00 am GMT (May 27)
German Gfk Consumer Climate at 6:00 am GMT (May 27)

What to Watch: NZD/USD

NZD/USD 1-Hour Forex Chart
NZD/USD 1-Hour Forex Chart

With no major catalysts expected for the major currency pairs, we’re taking a look at NZD/USD as the reaction to Wednesday’s RBNZ monetary policy statement may still have bullish legs, and as the pair shows signs of potentially more bullish moves ahead.

On the one hour chart above, we can see the pop higher earlier on the session after the Reserve Bank of New Zealand hinted at potentially raising rates, possibly some time in 2022. This is much earlier than what other major central banks are thinking, which is likely why it shouldn’t be any surprise to see the Kiwi breakout against all of the major currencies today.

We think this will likely be the driver for further Kiwi gains in the short-to-medium term, so we’ll be watching out for potential buying opportunities in Kiwi against the Greenback, mainly due to continued rhetoric from the Federal Reserve that inflation isn’t a major threat for now. If that story changes where the Fed is actually thinking of tapering their stimulus programs, then the tune will likely change on NZD/USD.

Until then, we’re watching for a long position opportunity, and with a bullish divergence forming on NZD/USD between price and stochastic as the pair pulls back, there may be a chance to go long at better prices soon.

If the market corrects down to broken resistance area around 0.7250, then we’ll be on the watch for bullish reversal candle before considering a long position to play the current monetary policy divergence between the RBNZ and the Fed.

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