The New Zealand dollar extended yesterday’s rally and crossed back above the 100-Day SMA (0.7161) to reach a high of 0.7214 on Tuesday, and the high-yielding currency may continue to retrace the decline from earlier this month as market participants raise their appetite for risk. The NZD/USD remains 100+pips higher from the open after moving 153% of its ATR, but the overnight advance looks to have lost steam ahead of the 50-Day SMA at 0.7260 as the 30-minute RSI falls back from a high of 90. As the rally remains overbought, the kiwi-dollar may continue to pare the overnight advance ahead of the Asian trade, and may test the 100-Day SMA at 0.7161 for short-term support.
The Japanese Yen continued to retrace the advance from the previous week and remains the worst performing currency against the greenback, and the USD/JPY may hold the narrow carried over from the previous week as market liquidity thins ahead of New Years Day. The dollar-yen rose to a high of 91.81 during the U.S. trade after moving only 26% of its average true range, and looks poised to push higher as the near-term rally remains supported by the 10-Day SMA at 91.10. However, as the 30-minute RSI approaches overbought territory, we may see the USD/JPY cover the gap from the 240-SMA at 91.58 before trending higher, but the slump in market liquidity is likely to keep the pair within a tight range as we head into the new year.
Join us to discuss the outlook for the major currencies on the DailyFX Forums
To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
