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I’ve got this risky NZD/USD countertrend play on my radar today.

Will the U.S. PPI release allow the channel resistance to hold? Or will we see another sharp dollar selloff?

Before moving on, ICYMI, yesterday’s watchlist checked outa simple trend pullback setup on USD/CHF. Be sure to check out if it’s still a valid trade!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Fed official Brainard: Controlling inflation is “most important task”

Fed official Daly says first hike could come in March

Tokyo confirmed increasing its pandemic alert level

New Zealand building consents recovered by 0.6% after previous 2.1% drop

Chinese vice premier called for tougher action to curb infections

Germany’s BGA trade association warned of huge supply chain disruptions due to Omicron

Fed official Harker open to more than three hikes this year if required

Upcoming Potential Catalysts on the Forex Economic Calendar:

U.S. headline and core PPI at 1:30 pm GMT
U.S. initial jobless claims at 1:30 pm GMT
FOMC Brainard’s testimony at 3:00 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: NZD/USD

NZD/USD 1-hour Forex Chart
NZD/USD 1-hour Forex Chart

Uncle Sam’s latest CPI report sparked a risk rally, but will it last?

Or will the upcoming catalysts put investors in a different mood today?

In particular, I’ll be keeping close tabs on the PPI numbers and FOMC Brainard’s upcoming testimony. Another set of strong price pressures and hawkish remarks might be enough to convince dollar bulls to charge soon.

If that happens, NZD/USD could retreat from the top of its rising channel visible on the hourly time frame.

Stochastic is indicating overbought conditions or exhaustion among buyers after all, and the 100 SMA is below the 200 SMA for now.

If sellers defend the ceiling, the pair could slide back to the support zones at the channel bottom or mid-channel area of interest at .6800.

Because this potential play runs against the ongoing uptrend, it might make sense to be more prudent with setting stops and being ready to take the opposite position if a breakout occurs!