This pair has been trending higher, moving above an ascending trend line on the 1-hour time frame and just bouncing off support. A rally could take it up to the latest highs near .7425 and beyond.
The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside or that the rally is more likely to continue than to reverse. Also, the 100 SMA has held as dynamic support as it lines up with the trend line.
Stochastic is also pulling up from oversold conditions to show that bullish momentum is returning. Another dip could find support at the trend line that’s been holding since last year or at the 200 SMA line in the sand for the uptrend.
New Zealand printed weaker than expected quarterly CPI of 0.1% versus the estimated 0.4% gain and down from the previous 0.5% figure. Underlying data revealed that this was mostly due to lower retail prices and automobile costs, which could push RBNZ tightening expectations back further.
However, dollar weakness has been in play again after Treasury Secretary Mnuchin remarked in the Davos summit that a weaker dollar is good for trade. Fears of a trade war, particularly with China, have also weighed on the currency.
Apart from that, the presence of risk appetite in the markets has been bearish for the safe-haven dollar. US data also turned out mostly weaker than expected, keeping traders doubtful about the Fed’s tightening plans this year.
By Kate Curtis from Trader’s Way