NZDUSD
The New Zealand Dollar comes into focus as the country prepares to release the latest consignment of the GDP figure. Analysts expect that the GDP will come in at 0.2%, representing a slower but more consistent pace of growth than the previous reading of 14%, which was more of a rebound after the economy contracted 12.2% in the previous quarter.
Westpac analysts predict that the present consolidation needs to be resolved for the pair to showcase the next direction. Currently, support for the consolidation range stays around 0.7150, with the 0.7200 price level forming the ceiling of the range. However, a closer look at the NZD/USD 4-hour chart reveals a price that is trapped within a triangle.
With the NZ GDP report retaining the ability to deliver a market surprise to the long or short side of the market equation ahead of the FOMC decision, traders should watch for the deviation in the numbers and prepare for a break of the triangle on either side.
A GDP report which shows a growth of 0.3% or higher should be good for the NZD, but with the FOMC looming large, I would rather be concerned more about what the Fed says about the US bond yields and stimulus. If this tilts towards the Fed applying measures to curb the rising bond yields, this could favour a break of the triangle to the upside. This move could then target 0.72264 initially, with 0.7260 lining up as another target to the north.
On the other hand, if the GDP comes in at 0.2% or lower, and the Fed decides to let the US bond yields go by doing nothing, we could see a breakdown of the triangle, targeting 0.7150 as the initial downside target. 0.7102 comes up as another potential target, with a potential pitstop at 0.71318.
