Trading the ST Top in New Zealand Dollar via GBP/NZD and NZD/USD
- New Zealand Dollar restrained by RBNZ Wheeler's intervention remarks.
- Japanese Yen continues to rally - watch ¥101.30 versus US Dollar.
- Fed Chair Yellen testimony highlights forex economic calendar on Wednesday.
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While many of the majors are trading in quieter sessions ahead of significant event risk the next two days - Federal Reserve Chair Janet Yellen's testimony to the Joint Economic Committee today at 14:00 GMT and the European Central Bank rate decision tomorrow at 11:30 GMT - there is activity percolating in some of the currencies local to Tokyo trading hours.
The New Zealand Dollar is under pressure after a mixed labor market report, and RBNZ Governor Graeme Wheeler poured further fuel on the fire by saying that "If the currency remains high in the face of worsening fundamentals, such as a continued weakening in export prices, it would become more opportune for the Reserve Bank to intervene in the currency market to sell New Zealand dollars," and continuing "...the Reserve Bank considers that the exchange rate is overvalued and does not believe its current level is sustainable."
Considering that the New Zealand Dollar has been the top performer this year among the major currencies covered by DailyFX Research, the recent turn of events may provide otherwise bored market participants with some ammunition to stir volatility. Accordingly, in light of recent price action in GBPNZD and NZDUSD, there are signs of early potential for reversals to occur in these pairs.
Watch the video above for rationale and levels to watch in GBPNZD and NZDUSD, as well as USDJPY.
--- Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail email@example.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.