The NZD has been on the firing line since after the US elections losing massive grounds against major currencies like the EURO, GBP and USD. This was expected considering the fact that the USD safe haven status was threatened by Trump election and expected policies and the general uncertainty surrounding the US future.
For this currency pair, there has been a turnaround for the GBP which has been gaining ground after Brexit and that mini Flash that occurred on 07.10.2016. It also looks like there is renewed confidence amongst British manufacturing sector since capital is cheaply available. This has strengthened the labor conditions which has been slumping Pre-Brexit and before rate cuts occurred. As for the NZD, things seems to be turning for the worse, Foreign Exchange differentials seems to be attracting capital from other economies making the NZD more expensive and therefore affecting export and keeping the non-tradable inflation low. This has overly made the headline inflation low despite easing and the bubble within the housing sector. Dairy prices and other exports are expected to rise in the medium to long term especially if US hike their interest rates.
From my last post, any strong break above 1.76 and above the resistance trend line in the daily chart will mean a beginning of an uptrend. This will only happen after this week’s candlestick closes with a strong bullish bar which closes above that 1.755 level. The monthly chart stochastics is oversold and a buy signal has been formed though the downward momentum is strong considering how the candlesticks hug the lower BB. Early break outs in the weekly chart above 1.76 will likely mean change of trend now that stochastics in the weekly chart is also oversold.
For today, since we don’t have lots of fundamentals, look to trade as follows:
Stop Loss: 1.736
Take Profit: Trail your profits.
Have a good trading day and a nice weekend.