NZD/USD rangebound after bouncing off 30-month low [Video]
(Stefanos Oikonomidis – XM)
NZDUSD has been trending lower since March, generating a profound structure of lower highs and lower lows. Nevertheless, the pair has been trading sideways in the last few daily sessions, attempting a minor recovery after hitting a 30-month low of 0.5510.
The momentum indicators are endorsing a cautiously positive near-term tone. Specifically, the MACD histogram has jumped above its red signal line but remains in the negative territory, while the stochastic oscillator is ascending sharply towards its 80-overbought region. However, the price is currently trading below the Ichimoku clould, painting a bearish technical picture for the pair.
To the upside, bullish actions could send the price to test the recent resistance region of 0.5815. Piercing through this barrier, the pair might ascend towards the July low of 0.6060, which could now act as resistance. A break above the latter may turn the spotlight to 0.6160 before the August high of 0.6467 comes under examination.
Alternatively, should selling pressures intensify, the price could encounter initial support at the 30-month low of 0.5510. Sliding beneath that floor, the bears could target the March 2020 bottom of 0.5468. If that floor collapses, the pair will dive towards levels not seen in the past 13 years, where the November 2008 support of 0.5186 might provide downside protection.
Overall, even though the market is pushing for some recovery, it seems that NZDUSD lacks the necessary momentum to alter its short-term picture back to positive. For the latter to be accomplished, a close above the 0.5815 ceiling is initially required.
Yen starts a correction of recent weakness
(Tomasz Wisniewski – Axiory Global Ltd.)
With the recent weakness on the Japanese yen, we had to expect some new comments from the BoJ and government officials. Many Forex crosses with JPY reached new, long-term highs, triggering worries about another possible intervention from Japanese policymakers and/or institutions.
Most recently, Japanese finance minister Suzuki made the following comment: “We will respond appropriately to the Forex market based on existing policy”. He said they’re monitoring moves very carefully.
Also, Japanese prime minister Kishida stated that they can’t tolerate sudden, excessive forex moves and also that they must take an appropriate response against excessive moves. So far, it’s helping to cool down recent yen weakness but nothing too spectacular, the yen is not strengthening dramatically, it’s really more of a cosmetic change.
In this piece, we’ll take a look at an interesting setup on the EURJPY, where we have a beautiful ascending triangle pattern, which a few days ago gave us a legitimate buy signal. The current support is on 144.4 (blue) and it may be a very handsome target for the current drop. As long as we stay above that support, the sentiment is positive and buyers are definitely winning. Should the price drop below, it will give us a signal to sell, but it’s hard to imagine that happening without any intervention coming from the land of Samurais.
Daily recommendations on major – USD/JPY
USD/JPY – 149.42
Despite dollar’s marginal rise above Monday’s fresh 32-year 149.08 high to 149.38 (New York) on cross-selling in yen, near term loss of upward momentum is likely to cap price below 149.50 and yield a much-needed correction, below 148.89 (New York low) would head to 148.42/45.
On the upside, a daily close above 149.50/60 would revive bullishness for stronger gain to 150.00 psychological handle before a much-needed correction later.
Data to be released on Wednesday
U.K. CPI, RPI, PPI input prices, PPI output prices, EU construction output, HICP, U.S. MBA mortgage application, building permits, housing starts, Canada CPI and producer prices.