The New Zealand dollar pushed to a high of 0.7095 on Monday as investors raised their appetite for risk, and the high-yielding currency may continue to retrace the sell-off from earlier this month as market participants speculate the Reserve Bank of New Zealand to normalize policy during the middle of 2010. The NZD/USD remains higher from the open after moving 46% of its ATR, and appears to be finding intraday resistance around the 10-Day SMA at 0.7095 as the RSI falls back from overbought territory. As a result, we may see the pair fall back from the high and fill-in the gap from the 100-SMA at 0.7068, and the pair is likely to hold a narrow range throughout the week as investors remain off-line ahead of the New Year.
The Japanese Yen failed to hold ground against the greenback and halted its three-day rally, with the exchange rate rising to a high of 91.77, and the exchange rate is likely to trend sideways over the week as market liquidity remains thin ahead of the New Year. The USD/JPY is slight higher from the open after moving only 32% of its average true range, and the pair may continue to retrace the decline from October as price action holds above the 100-Day SMA at 90.80. Nevertheless, the dollar-yen is likely to hold steady going into the Asian trade as the economic docket lacks market-moving potential, and we may see the pair move along the 100-SMA at 91.46 as risk trends continue to dictate price action across the currency market.
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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com
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