Kicking off the brand new week with a easy downtrend setup on NZD/USD!
Danger sentiment is leaning damaging to early, prompting early broad USD energy. Will main catalysts forward from each the U.S. and New Zealand hold the pattern going or mark the short-term backside?
NZD/USD 1-hour Foreign exchange Chart by TV
In our newest Occasion Information, we lined the upcoming rate of interest assertion from the Reserve Financial institution of New Zealand.
Market expectations are for the RBNZ to carry rates of interest at 5.50%, however there may be some uncertainty on the precise assertion. Foreign exchange merchants are on the look out for what rhetoric might get on future rate of interest selections and the way the RBNZ might view current financial developments in New Zealand. This uncertainty implies that we might even see a fairly strong spike in volatility as soon as the occasion performs out.
The Occasion Information additionally touched upon a few broad danger sentiment surroundings eventualities we might even see, and it seems to be like a danger aversion lean is enjoying out at the moment, primarily resulting from headlines from China this morning that mentioned rising contagion dangers from the property sector. This has pushed NZD/USD decrease early within the week, but it surely seems to be like at the moment’s transfer is already working out of steam.
So, a technical bounce could also be within the playing cards for NZD/USD, with the chances of the bounce rising if we see web better-than-expected financial updates from the upcoming China information dump (Tuesday, 2am GMT).
If that situation performs out and NZD/USD rallies greater on Tuesday, we’ll be watching the technical space of curiosity marked on the 1-hour chart above. It’s a confluence of a damaged help space on the 1-hour chart above (roughly across the 0.6050 minor psychological degree), Fibonacci retracement ranges, falling transferring averages, elevating the chances of drawing in technical sellers.
If U.S. retail gross sales information sparks broad danger aversion sentiment and if we see rhetoric from the RBNZ sign extra considerations over financial situations vs. stick excessive inflation, then that’s a robust sufficient argument to think about a possible danger administration plan on NZD/USD if bearish reversal patterns develop across the technical space of curiosity mentioned above.
In fact, the RBNZ rate of interest assertion is a prime tier occasion and there are different potential eventualities which will develop, so make sure to take a minute to learn Occasion Information: RBNZ Financial Coverage Assertion August 2023 to pay attention to the entire components which will affect Kiwi value motion this week earlier than making a danger administration plan!
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