News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Gold
Bearish
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
More View more
Real Time News
  • WTI crude oil prices (WTI) lost 4.7% so far this week. Demand concerns and a rising US Dollar sent crude oil prices lower on Thursday. Cloudy economic recovery prospects weighed on sentiment, despite falling US crude inventories. https://t.co/nVHCe4DX3g
  • Based on recent price action in the US Dollar, might... $USDSGD $USDMYR $USDPHP $USDIDR ...be heading higher next? Check out my latest #ASEAN technical update here - https://www.dailyfx.com/forex/technical/article/special_report/2020/09/24/US-Dollar-Comeback-Ahead-USDSGD-USDMYR-USDPHP-USDIDR.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/9sIQFVeydt
  • Wall Street Futures Update: Dow Jones (-0.393%) S&P 500 (-0.418%) Nasdaq 100 (-0.653%) [delayed] -BBG
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/FXpr6RibWT
  • Markets attempted pull risk trends out of their dive this past session, but sentiment (via $SPX) ultimately returned to its bearish course. Meanwhile, $EURUSD is consistent with its reversal. My video for today: https://www.dailyfx.com/forex/video/daily_news_report/2020/09/24/EURUSD-Extends-its-Dive-as-Late-Day-Selloff-Puts-SP-500-On-Verge-of-Correction.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/Q6JZKW2B1y
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.57%, while traders in EUR/GBP are at opposite extremes with 64.76%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/JHNAiIgVLv
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇨🇭CHF: 0.11% 🇪🇺EUR: -0.02% 🇯🇵JPY: -0.06% 🇨🇦CAD: -0.08% 🇳🇿NZD: -0.22% 🇦🇺AUD: -0.33% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/im3IxxDQ3y
  • Indices Update: As of 04:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.15% US 500: 0.12% FTSE 100: -0.94% Germany 30: -1.00% France 40: -1.04% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/X6mMfIY6HW
  • The US Dollar, British Pound, and Euro will all be closely watching key geopolitical developments in North America (Powell testimony), the UK (Brexit talks) and Europe (EU summit). Get your market update from @ZabelinDimitri here:https://t.co/q4AJW6PTCu https://t.co/e0rwBFOnqX
  • RT @stlouisfed: The current recession has in many ways been more extreme than the Great Depression, yet the economy is projected to recover…
NZD/USD Crowding Behavior Persist as RSI Diverges with Price

NZD/USD Crowding Behavior Persist as RSI Diverges with Price

2020-07-21 00:00:00
David Song, Strategist
Share:

New Zealand Dollar Talking Points

NZD/USD approaches the monthly high (0.6601) despite signs of crowding behavior in the US Dollar, but the Relative Strength Index (RSI) undermines the resilience in the New Zealand Dollar as the indicator appears to be diverging with price.

NZD/USD Crowding Behavior Persist as RSI Diverges with Price

The New Zealand Dollar has outperformed most of its major counterparts in July as NZD/USD managed to clear the June high (0.6585), and the exchange rate may stay afloat over the coming days as the IG Client Sentiment report continues to reflect crowding behavior in the currency market, with retail traders net-short NZD/USD since May.

Image of IG client sentiment for NZD/USD rate

The latest update shows 32.19%of traders are net-long NZD/USD versus 31.84% last week, with the ratio of traders short to long at 2.11 to 1.The number of traders net-long is 7.34% higher than yesterday and 10.00% lower from last week, while the number of traders net-short is 9.56% higher than yesterday and 10.85% lower from last week.

The drop on net-long exposure could be attributed to profit taking behavior as NZD/USD approaches the monthly high (0.6601), while the ongoing contraction in net-short interest suggests stop orders are getting triggered as the New Zealand Dollar continues to outperform its US counterpart.

It remains to be seen if the crowding behavior will persist as open interest for NZD/USD narrows 10.58% from the previous week, but current market conditions may keep the exchange rate afloat ahead of the Federal Reserve interest rate decision on July 29 as the central bank pledges to “increase its holdings of Treasury securities and agency MBS (Mortgage-Backed Security) and agency CMBS (Commercial Mortgage-Backed Security) at least at the current pace.”

Looking ahead, the Federal Open Market Committee (FOMC) appears to be on track to retain the current policy throughout the remainder of the year as US lawmakers try to nail out another fiscal stimulus program, and thecontraction in the Fed’s balance sheet may prove to be short lived as the central bank relies on its lending facilities as well as its asset purchases to support the US economy.

With that said, current conditions may keep NZD/USD afloat as the crowding behavior in the currency market persists, but recent developments in the Relative Strength Index (RSI) warn of a potential pullback in the exchange rate as the indicatorsnaps the upward trend from March and appears to be reversing course ahead of overbought territory.

Forex for Beginners
Forex for Beginners
Recommended by David Song
Forex for Beginners
Get My Guide

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

NZD/USD Rate Daily Chart

Image of NZD/USD rate daily chart

Source: Trading View

  • Keep in mind, NZD/USD cleared the February high (0.6503) in June as the Relative Strength Index (RSI) broke above 70 for the first time in 2020, and the exchange rate may continue to retrace the decline from earlier this year as it takes out the June high (0.6585) during the first full week of July.
  • However, the RSIappears to be diverging with price as the indicator snaps the upward trend from March, with the oscillator failing to produce the extreme readings seen in June even though the exchange rate managed to clear last month’s high (0.6585).
  • Nevertheless, the July high (0.6601) is on the radar for NZD/USD as it extends the advance from earlier this week, but lack of momentum to break/close above the Fibonacci overlap around 0.6600 (38.2% expansion) to 0.6630 (78.6% expansion) may generate range bound conditions as recent developments in the RSI point to a potential shift in market behavior.
  • Failure to hold above the 0.6550 (50% expansion) region may pushed NZD/USD back towards the overlap around 0.6490 (50% expansion) to 0.6520 (100% expansion), with the next area of interest coming in around 0.6400 (61.8% retracement) to 0.6430 (78.6% expansion), which largely lines up with the July low (0.6440).
Traits of Successful Traders
Traits of Successful Traders
Recommended by David Song
Traits of Successful Traders
Get My Guide

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

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

DISCLOSURES