NZDUSD
NZDUSD finished yesterday’s trading with solid gains thanks to risk appetite and New Zealand’s banking review. The currency pair finished with a 1.56% gain as it closed at 0.6197.
Yesterday, excitement over the Novavax’ vaccine entering human trials propelled higher-yielding currencies like the NZD higher. It also helped that the RBNZ’s Financial Stability Report (FSR) showed that New Zealand banks are in a solid position despite the pandemic. A deeper look at the report reveals that the central bank’s efforts to provide liquidity has helped buffer the short-term negative effects of CoVid-19. However, RBNZ Governor Orr still warned that there are still headwinds ahead of the economy.
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On the daily time frame, it can be seen that NZDUSD is testing the 100 SMA for resistance. When you enroll in our free forex trading course, you will learn that the 100 SMA is strongly regarded by many traders and that it can sometimes offer an inflection point for a market. If there are indeed sellers around its current price at the 0.6200 handle, we could soon see NZDUSD trade lower. By connecting the lows of ay 15 and May 26, we can see that there is trendline support around 0.6154. This price also coincides with the currency pair’s previous highs and the 50% Fib level (when you draw from the low of May 22 to the high of May 26).
On the other hand, if there are still enough buyers in the market, we could see the currency pair close above yesterday’s highs at 0.6227. Should this happen, resistance at the 100 SMA on the daily chart will have already been invalidated. It could then mean that NZDUSD is on its way to trade higher, possibly to 0.6312 where it may then test the 200 SMA.