NZD/USD is in a strong uptrend on its short-term time frame, boosted by rate hike expectations in this week’s RBNZ interest rate decision. Earlier today, New Zealand Prime Minister John Key remarked that rates need to return to normal levels sooner or later.
The pair has recently broken above a key resistance level at the .8400 major psychological handle. This could mean that more gains are in the cards, especially since a rising trend line can be drawn connecting the pair’s lows.
The pair could still retreat to the trend line before heading any higher. After all, stochastic is already in the overbought zone, suggesting that a quick dip might take place. Going long at the .8400 handle with a tight stop and a target of new highs around .8600 could yield a very promising return on risk.
By Kate Curtis from Trader’s Way