NZDUSD has been trending higher on its 4-hour time frame, moving inside an ascending channel patter. Price already bounced off support and is nearing the channel resistance at the .7100 major psychological mark.
If this resistance holds, price could make its way back towards support at the .6950 minor psychological level. Stochastic is already indicating overbought conditions so a selloff might be in order. RSI is also in the overbought area as well and might turn lower to draw more bears in the mix.
However, the 100 SMA is above the 200 SMA so the path of least resistance is to the upside. This could take NZDUSD past the channel resistance to start a sharper climb, depending on how today’s New Zealand events play out.
The Global Dairy Trade auction is scheduled in the late US session and a decline in dairy prices could spur losses for the Kiwi. The index has risen for the past couple of auctions and analysts are doubtful that this can be sustained.
Soon after, the quarterly jobs report is due and a 0.6% uptick in hiring is eyed. This would be a slower pace of growth compared to the earlier 0.9% gain. In addition, the unemployment rate is expected to rise from 5.3% to 5.5%.
As for the US dollar, the downbeat ISM manufacturing PMI has weighed on its gains yesterday, as the index fell from 51.8 to 50.8 instead of falling to just 51.6. There are no major reports out of the US economy today but FOMC official Mester has a testimony lined up.
By Kate Curtis from Trader’s Way