The NZD/USD has climbed in trading this morning, and the question bullish speculators will certainly be wondering about is if the move higher can be sustained.
The NZD/USD is trading slightly above the 0.62000 mark as of this writing. The climb higher in the NZD/USD since challenging lows around the 0.61120 ratio last Tuesday has been fairly impressive and has correlated to the broad Forex market rather well. The Reserve Bank of Australia came out with an ‘unexpected rise of 0.25% early this morning, and while this is not connected to New Zealand directly – the hike by the RBA may have helped feed some buying momentum in the NZD/USD as a reaction.
While the move upwards in the NZD/USD will certainly be welcome by bullish traders, caution should remain a cornerstone of their speculative wagers. Tomorrow the U.S Federal Reserve will release its FOMC Statement and it will certainly cause volatility. Sustaining highs above the 0.62000 will be of interest for short-term traders because the level serves as a key psychological spot. The U.S Federal Reserve is almost guaranteed to increase their interest rate tomorrow, but this has been ‘cooked’ into the price of the NZD/USD already.
Yesterday’s ISM Manufacturing PMI came in slightly above expectations from the U.S, but the economic data that may have sent a shiver down the spines of financial institutions was the ISM Manufacturing Prices numbers which were also published on Monday. The inflation number came in much stronger than expected and this sets the table for a potentially aggressive sounding U.S Federal Reserve tomorrow.
- Investors already have digested an interest rate hike from the Fed on the 3rd of May, but it is the June outlook that could create sparks for the NZD/USD.
- If the U.S central bank hints at a June increase tomorrow, this could cause some selling pressure in the NZD/USD.
- Tomorrow’s Federal Reserve pronouncements will be important and cause volatility late on Wednesday and into Thursday’s trading. Day traders need to be prepared with solid risk management.
Upside momentum in the NZD/USD should be treated carefully today. Choppy conditions are almost certain to start being demonstrated as today moves on and into Wednesday. The 0.62000 level may serve as a magnate for speculators in the short-term, traders should not be overly ambitious with their price targets for the moment. After the U.S Federal Reserve delivers more clarity regarding what it will do with the Federal Funds Rate in June and beyond, the NZD/USD could find a comfortable trend again, but this will not happen for a couple of days.
Current Resistance: 0.62045
Current Support: 0.61920
High Target: 0.62430
Low Target: 0.61675
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