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NZD/USD Failure to Close Above 0.7700 Raises Risk for Near-Term Top

NZD/USD Failure to Close Above 0.7700 Raises Risk for Near-Term Top

David Song, Strategist

Talking Points:

- NZD/USD Hit by Dovish RBNZ Comment- Bullish Momentum at Risk.

- USD/CAD Risks Fresh Monthly Lows Amid Series of Lower-Highs.

- USDOLLAR Outlook Mired by Fed Uncertainty; 11,950 Support in Focus.

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NZD/USD

NZD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Looks as though NZD/USD will continue to make failed attempts to close above 0.7675 (23.6% retracement) 0.7700 (50% expansion) as the Reserve Bank of New Zealand (RBNZ) sees scope to revert back to its easing cycle.
  • Nevertheless, will retain a constructive view on NZD/USD going into the RBNZ’s April 30 interest rated decision as long as price & the Relative Strength Index (RSI) preserve the bullish trend carried over from March.
  • Even though the DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-short NZD/USD since April 23, open interest has slipped 11% with the ratio narrowing to -1.02.

USD/CAD

USD/CAD Daily Chart
  • Despite expectations for a test of former support around 1.2360 (38.2% retracement) to 1.2390 (161.8% expansion), lack of momentum to close back above the 1.2300 handle may highlight a near-term topping process in USD/CAD.
  • Dollar-loonie remains at risk for a further decline as the bearish RSI momentum gathers pace; break into oversold territory may foreshadow a more aggressive selloff in the exchange rate.
  • Break/close below 1.2070 (38.2% retracement) to 1.2110 (61.8% retracement) raises the risk for a larger correction in USD/CAD.

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Read More:

Price & Time: CAD Questions Remain

GBPJPY Breakout Eyes 181- Long Scalps Favored Above 179

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11964.97

12022.13

11961.77

-0.24

87.22%

NZD/USD Failure to Close Above 0.7700 Raises Risk for Near-Term Top USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar struggling to hold its ground following the slew of dismal data; close below 11,950 (38.2% expansion)/11,960 (50-Day SMA) may spark a larger correction ahead of the Fed’s April 29 interest rate decision.
  • May continue to see range-bound prices going into the end of April as U.S. Durable Goods Orders are projected to rebound 0.6% in March; will keep a close eye on Non-Defense Capital Goods Orders excluding Aircrafts, a proxy for future business investments.
  • As the bearish RSI momentum continues to take shape, will continue to watch 11,869 (23.6% expansion) to 11,901 (78.6% expansion) for key support.

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Release

GMT

Expected

Actual

Initial Jobless Claims (APR 18)

12:30

287K

295K

Continuing Claims (APR 11)

12:30

2290K

2325K

Markit Purchasing Manager Index- Manufacturing (APR P)

13:45

55.7

54.2

New Home Sales (MAR)

14:00

515K

481K

New Home Sales (MoM) (MAR)

14:00

-4.5%

-11.4%

Kansas City Fed Manufacturing Activity Survey (APR)

15:00

-2

-7

Click Here for the DailyFX Calendar

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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