Think it’ll make it all the way down to the previous lows or lower?
Before we take a look at the setup, here are the Asian sessions’ biggest headlines:
Fresh Market Headlines & Economic Data:
- ECB head Lagarde reiterated the importance of EU Recovery Fund
- U.S. existing home sales up to 4.71 million from 3.91 million
- EIA crude oil inventories up 4.9M barrels vs. projected 2.1M drop
- Australia reported the highest COVID-19 deaths in three months
- Asian shares dip on news of Chinese consulate closure in Houston
- South Korean economy entered recession mostly due to lower exports
- Australia’s NAB quarterly business confidence index down from -12 to -15
Upcoming Potential Catalysts on the Economic Calendar:
- German GfK consumer confidence index at 7:00 am GMT
- U.K. CBI industrial order expectations at 11:00 am GMT
- BOE member Haskel’s testimony at 12:00 pm GMT
What to Watch: GBP/NZD
Commodity currencies have fared well in the past few hours, even with a few events that could’ve sparked risk-off flows.For one, the closure of the Chinese consulate in Houston has thrown the spotlight back on tensions between the U.S. and China, but it looks like market participants are shrugging it off.
Are traders just THAT hungry for riskier assets these days?
If so, this pair might have enough bearish energy to take it down to the swing low just above the 1.9000 major psychological support. Technical indicators confirm the presence of selling pressure after all.
The 100 SMA is below the 200 SMA to confirm that bearish momentum is in play, possibly even being strong enough to spur a break below the previous lows. Stochastic is already heading south, so GBP/NZD could keep following suit until oversold conditions are met.
But if market sentiment suddenly turns a corner in the next few hours, we might see a much larger correction on this pair. Either way, better keep the average GBP/NZD volatility in mind if you’re trading this one!