Daily Forex Reports | by Kate Curtis | Tuesday, 23 February 2016 05:36 UTC
NZDUSD had previously been moving inside a descending triangle pattern, finding support around .6575 then forming lower highs on its 1-hour chart. Price recently broke past the triangle resistance and zoomed up to the .6725 level before showing signs of a pullback.
Applying the Fib tool on the latest swing low and high shows that the 50% retracement level lines up with the broken resistance around .6650. This might hold as support moving forward, with the 61.8% Fib as the line in the sand for any correction, and push price back up to the previous highs and beyond.
The 100 SMA is still below the longer-term 200 SMA for now but an upward crossover appears to be brewing. In that case, more buyers could push the pair higher one RSI and stochastic turn up from the oversold regions. For now, these oscillators are still heading south, which means that sellers are in control.
There are no major events due from both the US and New Zealand for today, leaving market sentiment mostly responsible for price action. So far, it looks like the pickup in commodity prices led by crude oil is keeping risk appetite in play, supporting the higher-yielding Kiwi.
In addition, the recent shift to a less hawkish stance by Fed officials is dampening hopes for March rate hike and is weighing on dollar demand. The US preliminary GDP reading is up for release on Friday and a downgrade from 0.7% to 0.4% is eyed, likely dragging the dollar lower.
Fears of a global economic slowdown stemming from China have also faded recently, although that's probably because other economic concerns like the Brexit are dominating the headlines. For now, it looks like the Kiwi could keep drawing support from the risk-on flows before more top-tier reports are released next week.
By Kate Curtis from Trader's Way
Forex Market Analysis
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