More Upside Likely in USDCAD; NZDUSD Bearish Bias to Continue
- US dollar dominance continued this past week and might continue this week as well unless the US dollar sellers find a reason to take it lower from the current levels.
- Australian TD Securities Inflation data was released earlier during the Asian session by the University of Melbourne - Faculty of Economics and Commerce, which reported inflation at 0.1%, compared to the previous reading of 0%.
- NZDUSD pair trying to correct higher, but might face several hurdles on the way up.
- EURUSD buyers have no reason to take the pair higher, which imposes a risk for more downside in the short term.
The New Zealand dollar suffered heavy losses in the past couple of weeks against the US dollar. This past week turned out to be the US dollar week, as the US nonfarm data lifted the US dollar. The NZDUSD pair broke an important bullish trend line on the hourly chart, which paved way for more losses. The pair traded close to the 0.7700 support area. It is now correcting higher, but might face resistance around the broken support area. One important thing to note is that the highlighted bullish trend line is coinciding with the 50% Fibonacci retracement level of the last drop from the 0.7921 low to 0.7713 high. Moreover, the 100 hourly simple moving average is also aligning itself around the stated area. So, there is a lot of resistance around the 0.7800 levels.
Intraday Support Level – 0.7713
Intraday Resistance Level – 0.7800
- Overall, as long as the pair stays below the broken trend line it might move lower again.
- A break above the 100 moving average would call for a larger correction moving ahead.
If the NZDUSD pair fails to correct close to the broken trend line, then the recent low of 0.7713 could be tested again. One should avoid chasing weakness in the pair, as there can be a short covering at any point of time to cover recent losses.
The US dollar surged higher against the Canadian dollar as well, and broke a critical bearish trend line on the hourly chart. However, the USDCAD pair lagged the momentum after the break. It is consolidating just above the broken trend line as of writing. There is a chance that the pair might blast higher after consolidation. So, we need to keep a close eye on the broken resistance trend line. On the downside, immediate support can be seen around the 1.1230-20 levels, and on the upside the recent high might act as a resistance.
Intraday Support Level – 1.1220
Intraday Resistance Level – 1.1265
- A break and close above the recent high might call for a test of 1.1300.
- As long as the pair stays above the 1.1220-00 area more gains are likely in the short term.
Today, the Canadian Ivey PMI report will be published during the NY session, which is likely to cause moves in the USDCAD pair. The market is expecting a rise in the PMI, which if not delivered could lift the USDCAD pair.
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New Zealand dollar traded lower this past week after solid gains against the US dollar, but found support around and important area which means there is a chance of recovery in the near term.
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