NZD/USD on a Tear, but for How Much Longer?

NZD/USD is up over 2% on the week and its highest level since early August.

Over the weekend, New Zealand announced plans to increase infrastructure spending in order to boost growth into 2020.  When the markets opened on Monday morning, NZD/USD was shot out of a cannon.  Add to that a better than expected NBS China Manufacturing PMI and a better non-official Caixin Manufacturing PMI,  and NZD/USD took off.  Today is Thursday, and the Kiwi pair hasn’t looked back since!  Just today, RBNZ Governor Orr suggested rates are on hold at the next RBNZ meeting in February given the strong data and expected fiscal stimulus over the next year.  But is it time for NZD/USD to pause and take a breather?

NZD/USD is up over 2% on the week and its highest level since early August.  On a daily chart, the pair broke the neckline of its inverse head and shoulders pattern on October 18th, retested it twice, and finally hits the target level on Monday near .6500.  This level also coincides with the 50% retracement level from the July 19th high to the October 1st low.  NZD/USD pushed right to the Fibonacci retracement 61.8% retracement level of that same timeframe and halted near .6572.  This level also coincides with horizontal resistance dating back to July.  The pair has pulled back slightly from there on the day and closed at the 200 Day Moving Average near .6545.  The RSI on the daily is also at overbought levels.  But is this enough for NZD/USD to pull back?

Source: Tradingview,

On a shorter 240-minute timeframe,  NZD/USD traded up to the 161.8% Golden Fibonacci level from the high on November 4th to the lows of November 8th at .6555.  The RSI is also diverging with price from overbought levels.  Support comes in at .6500 and then .6458. 

Source: Tradingview,

All of this indicates the NZD/USD may be ready for a pullback, possibly on some profit taking, heading into the weekend.  Although lately there always to be some kind of positive Friday tweet from US President Trump’s team regarding the US-China trade deal, one must consider if the markets are now immune to these headlines.   If the markets no longer care, NZD/USD may be ready to pare its weekly gains.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account