NZD/USD Coils as Traders Await RBNZ – Levels to Know
- NZD/USD advance vulnerable heading intoRBNZ
- Updated targets & invalidation levels
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Technical Outlook: Kiwi posted an outside day reversal off median-line resistance yesterday with the decline breaking below the lower parallel of the ascending pitchfork extending off the December / January lows. On face value, the pair has simply set a well-defined weekly opening range and heading into the RBNZ interest rate decision, the risk remains lower while below confluence resistance at 7352 with a break below 7254 needed to validate a near-term reversal. Subsequent support targets are eyed at 7200, 7179& the lower parallel (~7150s).
A breach above the upper parallel invalidates the reversal play with such a scenario targeting confluence resistance at the 74-handle (also an area of interest for near-term exhaustion). Keep in mind the central bank is widely expected to maintain its current policy stance and the focus will be on the accompanying commentary as a pick-up in inflation is counter-balanced by sluggish wage / job growth.
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are short NZDUSD- the ratio stands at -1.86 (35% of traders are long)- weak bullishreading
- Long positions are 0.6% lower than yesterday and 5.6% below levels seen last week
- Short positions are 5.8% higher than yesterday and 3.4% above levels seen last week
- Open interest is 3.5% higher than yesterday and 9.41% above its monthly average
- While the current SSI profile continues to point higher, it’s worth noting that the ratio has continued to narrow from a 2017 extreme of -2.51 and leaves the long-side vulnerable near-term. Look for a build in long positioning in the coming days for further evidence that the pair may be poised for a more meaningful pullback
Relevant Data Releases
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Other Setups in Play:
- USD/JPY Approaches Key Slope of Influence
- AUD/JPY to Threaten Key Support Ahead of RBA
- Weekly Strategy Webinar: USD Majors at Key Inflection Points
- EUR/USD Risks Near-term Exhaustion Heading into NFPs
---Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.