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In early trading this morning the NZD/USD has turned lower, but the currency pair’s cautious near-term higher price range continues to be displayed.
After falling to a low of nearly 0.62050 on Tuesday of last week, the NZD/USD is currently traversing around 0.62700 as of this writing. Speculators have been treated to a rather strong test of values within the NZD/USD the past month as nervous behavioral sentiment has made the currency pair rather volatile, but the past couple of days have produced more calm results. However, traders should not rest easy, because it is likely the price range of the NZD/USD will soon again display fast conditions.
Since Friday of last week, the NZD/USD has mostly traded between the 0.62600 and 0.63000 range. This near-term range is not going to hold and consolidation will disappear within the next day and a half. The U.S. will present a variety of risk events that will cause technical and fundamental challenges within the NZD/USD over the next three days. Today Purchasing Managers Index data will be published in the U.S., tomorrow Treasury Secretary Yellen will speak, and on Wednesday night the Federal Reserve will issue the FOMC Meeting Minutes.
The near-term ability of the NZD/USD to maintain its higher price range may signal that financial institutions believe more buying power will emerge in the currency pair. However, the NZD/USD has also shown extremely choppy results in the past month and the incremental highs made in recent days should be treated with suspicion. While traders and financial houses may believe the U.S. Fed will halt their interest rate hikes momentarily in June, there are no guarantees. If tomorrow’s rhetoric from the U.S. Fed is aggressive this would likely send the NZD/USD lower again.
- Risk-averse trading is also being ignited because of fears that the U.S. debt ceiling talks are not finding a solution. This short-term ‘noise’ may continue to cause some headwinds until the issue is solved.
- The U.S. will also publish GDP numbers on Thursday, the growth data will be studied intently, if the result is weaker than anticipated this could help buyers of the NZD/USD later this week.
Short-term support is currently in sight around the 0.62600 realms as the NZD/USD has sold off slightly this morning. If this level is able to prove durable it could be a good near-term signal for speculative buyers of the NZD/USD. A test of the current range will be fast and could vanish, but it may provide a rather solid place to wager short-term on perceived support and resistance levels. However, tomorrow the near-term consolidation of the NZD/USD is likely to disappear quickly and traders need to be ready.
Current Resistance: 0.62910
Current Support: 0.62600
High Target: 0.63090
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