British Pound Halts Slide, New Zealand Dollar Extends Decline Following RBNZ Rate Decision
The British Pound halted the three-day decline and is the best performing currency against the U.S. dollar on Thursday, and the currency is likely to maintain its current range ahead of the Bank of England minutes due out on next Wednesday as investors weigh the outlook for future policy. The GBP/USD is nearly 60pips higher from the open after moving 70% of its daily ATR, and we may see the exchange rate hold along the 240-SMA at 1.5028 going into the Asian trade as the daily RSI continues its ascend from oversold territory. As a result, we may see a short-term correction in the pair as the relative strength index bounces back from a low of 21, but the pair is likely to maintain the narrow range carried over from the previous week as price action fails to hold above the 10-Day SMA. At the same time, we may see the pound-dollar maintain the downward trend from the January high (1.6456) as the BoE maintains a cautious outlook for the U.K., and dovish rhetoric from the MPC is likely to weigh on the exchange rate as investors scale back expectations for a rate hike later this year.
The New Zealand dollar extended the decline following the RBNZ interest rate decision on Thursday, with the exchange rate slipping to a low of 0.6964. The NZD/USD remains 30pips lower on the day after moving 67% of its average true range, and the pair may work its way back towards the 120-SMA at 0.7018 as the overnight decline stalls ahead of the 200-Day SMA at 0.6963. However, the lack of momentum to cross back above the 50-Day SMA (0.7097) earlier this week is likely to keep the pair range-bound going into the following week, but we may see a breakout later this month as the daily moving averages start to converge with one another. Nevertheless, as risk trends continue to dictate price action in the foreign exchange market, a rise in risk appetite could lead the NZD/USD to trend higher over the remainder of the week as the greenback remains the most popular fund-currency, next to the Japanese Yen.
Join us to discuss the outlook for the major currencies on the DailyFX Forums
To discuss this report contact David Song, Currency Analyst: email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.