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NZD/USD Shorts at Risk Ahead of Jobs Data- 6640 Key Support

NZD/USD Shorts at Risk Ahead of Jobs Data- 6640 Key Support

Talking Points


Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • NZDUSD support confluence at 6644/50- broader bullish invalidation
  • Resistance 6729 (weekly open) backed by 6790- near-term bearish invalidation
  • Subsequent resistance objectives at 6849, the October high at 6896 & 6970
  • Support break targets 6619, 6565 & the lower median-line parallel
  • Daily RSI coming into September support trigger- break would be bearish
  • Key Event Risk Ahead: New Zealand Unemployment tonight, U.S. ADP employment tomorrow & NFPs on Friday

NZDUSD 30min

Notes: There’s power in parallels – Kiwi has continued to trade within the confines of these parallels off the October highs with today’s lows coming in just pips off the 38.2% retracement of the late-September advance at 6644. The short-side is at risk while above this region heading into major event risk into the later part of the week.

Interim resistance targets eye at the October low-day close at 6699 backed by the weekly open at 6729 and the 50% retracement at 6758. A breach above 6790 is needed to validate a larger turn in the kiwi, targeting the high-day close at 6849 & the October high. A quarter of the daily average true range yields profit targets of 24-27 pips per scalp.

Caution is warranted heading into tonight’s New Zealand employment report with the release likely to fuel added volatility in kiwi crosses. Although the headline unemployment figure is expected to uptick to 6.0%, labor force participation is expected to hold near record highs at 69.3% (is the all-time high hit back in march was 69.5%). Keep in mind that an increase in the broader participation rate will tend to put artificial upside pressure on the headline print and as such, risk remains to the upside for the kiwi on a stronger read.

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Relevant Data Releases Next Week

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.