Over the last month or so, the USD has been trailing major currencies as Trump seemed to back a weaker USD and embark on what appeared to be protectionist policies. This however looked to have reversed when Trump announced that he plans to put in place an ambitious tax reform strategy since the Reagan era. As you might be aware any US tax reform is pro-USD and this is why the USD appreciated against major currencies especially the JPY in the Asian session. Trump also said that implementation of tax reforms was necessary to make US goods competitive and lower “Tax Burdens on businesses” in the face of currency manipulators such as China and Japan who don’t allow their currencies to appreciate. Despite these comments, investors remain uncertain on how Trump administration will balance between his desire for a weaker USD while implementing tax reforms and fiscal policies. The NZD on the other hand continued to slide after yesterday’s RBNZ statement which deflated hopes of an earlier rate hike as was widely expected by investors.
This currency pair continues to trend lower as fundamental considerations take effect. Technically, the recent leg down in the daily chart is strong and therefore as investors we look to take advantage of the strengthening greenback. As shown in the chart above, our ideal TP will be at 0.71 and 0.69. There is clear price rejection at resistance trend line at 0.73 and this is confirmed by that overbought stochastics and a sell signal printed on Wednesday.
Today, trade as follows with entry in the 1HR chart as highlighted:
Sell Stop: 0.7165
Stop Loss: 0.7230 above yesterday’s highs
Take Profit: 0.71 and 0.69 in the daily chart.
Have a good trading day and a nice weekend