Selling NZD/USD Into Gains, In The Short Term
Vladimir Ribakov | Jul 24, 2014 06:32AM ET
The New Zealand dollar was crushed earlier during the Asian session against the US dollar. The main reason for the same was the dovish rate statement from the RBNZ, as they mentioned about the appreciation of the New Zealand dollar and possible intervention. I think the NZD/USD pair should continue trading lower at least towards the 0.8520 level. So, we should be looking for short-term sell opportunities.
The NZD/USD pair broke a triangle on the 4 hour chart, and also breached an important support area around the 0.8630-20 levels. The broken support area might act as a resistance moving ahead for the pair. So, if the pair corrects higher from the current levels, and trades closer to the mentioned level, then we can jump into a sell trade. Remember, if the pair continues trading lower, then we will stay away and analyze later.
Initial target should be around the 0.8540 level, and final target could be around the 0.8510 level. Stop should be above the 0.8650 level.
h3 Reviewing yesterday’s events and trades/h3Yesterday, the MPC meeting minutes were released by the Bank of England. There was nothing new in the same, but the market did not like the fact that the bet of interest rates hike was not increased. This caused a minor downside in the GBP/USD pair. Moreover, the RBNZ announced the interest rate and increase it from 3.25% to 3.5%. However, the central bank warned the market of a possible intervention. This ignited a sharp down move in the NZD/USD pair, as it traded below the 0.8600 support area.
h3 Fundamental Outlook for the day/h3Today, the US initial jobless claims and new home sales data will be published during the NY session. If the outcome comes out positive, then the US dollar might gain bids in the upcoming session. The US dollar is already trading higher against the Euro and the British pound, so any bullish scenario might ignite a rally in the US dollar. Moreover, the Japanese inflation data will be released during the next Asian session, which could act as a catalyst for the USD/JPY pair in the short term.
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