Chart of the Day: NZDUSD
There’s been a heavy influx of liquidity in global equities with the S&P 500 at an all-time high. All eyes turn to tonight’s nonfarm payrolls numbers. Revisions, unemployment figures and hourly earnings will play an important role, as last month’s poor job numbers won’t be hard to beat with the Federal Reserve fund’s futures pricing a 100% July cut. As we’ve seen this week, the USD had very modest moves, and is unlikely to change unless we see a punchy number above the consensus of 230,000 jobs, or more, created.
This week we’ve seen an improved risk appetite in NZDUSD, as it’s holding well at key 0.67200 resistance level. The feel-good factor has resulted in two-month highs, as the pair bounced from a textbook double-bottom. Technically, this could target an initial move into 0.6788, which is a 150% extension of the prior range. But the classic double-bottom target would suggest a rally into 0.6900.
A sustained move like this has attracted sellers, too, but the pullback was very short-lived. The bidders have won this battle so far, with strong momentum in the move here. Probability suggests that after any short-term consolidation, it might pave the way for the next leg higher, with tonight’s NFP figures a potential catalyst.
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