Short-Term Dynamics Turn Nervous on Solid U.S Data

The NZD/USD dived lower yesterday in the wake of better-than-anticipated U.S. economic data, which likely caused financial institutions to become nervous about their outlooks.

As of this writing the NZD/USD is trading near the 0.61150 ratio, after trading at a high of nearly 0.62230 last Thursday. New lows continue to be challenged in the short term. Price action in the NZD/USD is always rather turbulent for day traders as they try to make their wagers.

However, the added cloud of uncertainty regarding U.S. central bank policy is making speculation in the NZD/USD difficult unless a trader is staying informed. Technical traders who are not looking at fundamentals may feel they have proven methods regarding their choice of signals, but yesterday was a prime example of why it helps to pay attention to data.

The NZD/USD was trading near the 0.62000 mark early yesterday and seemed to be keeping this level in sight as an important short-term psychological target.  However, the publication of U.S Core Durable Goods Orders and the CB Consumer Confidence readings changed the behavior of the broad markets quickly. Both U.S. reports came in much better than expected, showing the U.S economy remains rather strong.

The NZD/USD is trading near important support levels again as of this morning.  The 0.61100 mark is nearby and if this level is penetrated lower it might sound alarm bells within the NZD/USD market, particularly among speculators who have believed that bullish sentiment in the currency pair was a certainty in the near to mid-term. The NZD/USD has shown the ability to fight higher, but its trend when a long-term chart is viewed has been rather negative.

Speculators who remain geared towards buying positions of the NZD/USD on the optimistic notion that upside action is certain to develop need to understand timing market reversals that become sustained is a difficult task. Short-term traders should remain locked onto the potential of quick-hitting endeavors which combine their insights regarding behavioral sentiment via technical perceptions and economic data which continues to be an important factor.

• Tomorrow the U.S. will release its Gross Domestic Product results and if the numbers are stronger than expected, this could spur on additional bearish sentiment in the NZD/USD in the short term.
• The Reserve Bank of New Zealand will publish its Statement of Intent on Friday, which essentially outlines the central bank’s sentiment moving forward.
• Financial institutions will be keen to see the statement. If the statement is considered ‘neutral’ and U.S economic data is still showing signs of durability, the NZD/USD could actually become weaker.

Current Resistance: 0.61240

Current Support: 0.61050

High Target: 0.61525

Low Target: 0.60775

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