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After falling from highs produced in the middle of last week and challenging support on Friday, the NZD/USD has bounced slightly higher.
Speculators have been treated to a rather breathtaking rollercoaster ride in the NZD/USD for the past two weeks. On early Thursday of last week, the NZD/USD created a three-month high as it tested an apex of 0.63850, but as the day progressed and went into Friday a steep reversal began to happen. Experienced traders hopefully were braced for the potential of a move lower and using stop losses during this dive towards a value of 0.61810.
The NZD/USD was not done supplying price action on Friday as it climbed ever so slightly, but it did not finish above 0.62000 as the weekend began. Yesterday’s trading though began to provide a push upwards as the NZD/USD began trading, though it was a rather polite movement the currency pair did show the capability to sustain value over the 0.62000 level. And then a curious bit of economic data came from the U.S. which may have spurred on additional USD weakness and sets today up as an intriguing for speculators.
The manufacturing sector in New York is considered an important barometer by some analysts, and yesterday’s Empire State Manufacturing Index came in with a negative result. The report indicates that business activity and outlook in the Northeast region of the U.S. is not good. While the NZD/USD didn’t go up like a rocket, the currency pair did perform a solid little bounce. The negative data may have given financial institutions another bit of evidence to believe the U.S. Federal Reserve will need to halt its aggressive interest rate stance in June.
- Today the U.S. will release Retail Sales numbers and if the data is weaker than anticipated this could help fuel buying in the NZD/USD.
- Conservative traders may not want to have a position open before the U.S Retail Sales statistics are published.
Having achieved a three-month high early last Thursday shows that many financial institutions and some big traders are likely leaning towards a bullish perspective regarding the NZD/USD long-term. The reversal lower is a clear sign however, that nervous sentiment still exists and a move towards risk-adverse positions can develop in an instant.
If the NZD/USD is able to maintain some of its gains made yesterday and early today, this could be setting the table for an additional climb higher particularly if U.S Retail Sales come in weaker than anticipated. But there are no guarantees, and if the Retail Sales come in stronger than expected this could certainly weigh on the NZD/USD and cause another thrust lower.
Speculators who want to wager may believe U.S consumers will start to show some signs of more cautious spending. If this proves to be the case the NZD/USD could begin to test resistance levels above quickly. Use risk management ladies and gentlemen.
Current Resistance: 0.62450
Current Support: 0.62135
High Target: 0.63025
Low Target: 0.61875
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