Coronavirus fears popped back in the markets, causing risk-off flows to surge again and weigh on higher-yielding currencies. Here’s a short-term correction play I’m watching.
Currency Snapshot:
Fresh Market Headlines & Economic Data:
- Asian shares slump on coronavirus pandemic fears, bonds rally
- Coronavirus infects U.S. soldier based in South Korea
- U.K. BRC shop price index down 0.6% y/y in Feb after previous 0.3% dip
- Australia’s construction work done slumped 3.0% in Q4 2019 vs. projected 1.0% drop
- BOJ core CPI up 0.3% vs. 0.2% forecast, 0.3% previous
Upcoming Potential Catalysts on the Forex Calendar:
- Swiss Credit Suisse Economic Expectations index at 9:00 am GMT
What to Watch: NZD/JPY
There’s not much in the way of top-tier data for the upcoming London session, so the risk-off sentiment from the Asian session could carry on.
NZD/JPYThe 38.2% Fib just slightly above the 70.00 major psychological handle could be a good area to hop in a short position, as it lines up with a broken support level.
This also happens to be right smack in line with the 100 SMA dynamic inflection point, which is below the slower-moving 200 SMA to confirm that resistance levels are more likely to hold than to break.
Stochastic still has some room to climb before reaching overbought levels, though, so a higher correction to the next Fibs might be possible if European traders are in a risk-on mood.
Not sure where to place your stop and profit targets? Make sure you know about NZD/JPY’s volatility in the last couple of days!