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With little expectations of a major catalyst ahead, this ranging pattern on NZD/USD is one to watch ahead of business sentiment data from New Zealand.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/CAD ahead of the ECB monetary policy statement, so be sure to check that out to see if there is still a potential play!

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
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Fresh Market Headlines & Economic Data:

Dow falls for the first time in 5 days, drops more than 200 points after disappointing jobs data

ECB opts to wait and see, leaves rates and stimulus program unchanged

ECB to go all the way on stimulus even as economy recovers, Lagarde says

U.S. retail sales increased a better-than-expected 7.5% in June.

Philly Fed manufacturing index retreats to 24.1 in July from prior month’s 27.5

U.S. Homebuilder sentiment jumps back to pre-coronavirus pandemic high

U.S. Business Inventories were down -2.3% m/m in May, -4.8% y/y

ADP Canada National Employment Report: Employment in Canada Increased by 1,042,900 Jobs in June 2020

Foreign investors acquired $22.4 billion of Canadian securities in May, following a record investment of $49.0 billion in April.

Euro area international trade in goods surplus €9.4 bn; €7.1 bn surplus for EU

Working Hours Slump Points to Trouble for U.K. Labor Market

Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:

Fed Evans speech at 5:30 pm GMT
U.S. Net Long-Term Tic Flows at 8:00 pm GMT
New Zealand Business Manufacturing Index at 10:30 pm GMT
U.K. Gfk Consumer Confidence Flash at 11:01 pm GMT

What to Watch: NZD/USD

NZD/USD 1-Hour Forex Chart
NZD/USD 1-Hour Forex Chart

We’ve got a pretty light forex calendar in terms of potential catalysts for strong moves, so the odds of a breakout or momentum play are pretty low for the next session. Instead, we’re checking out range plays, NZD/USD in particular as volatility may pick up a bit with upcoming mid-to-low tier economic data from both the U.S. and New Zealand.

On the one hour chart above, we can see that NZD/USD has been in a range for the month of July, trading between 0.6500 – 0.6600, mainly moved by global risk sentiment and coronavirus news. Again, unless we see some surprise headlines to shift global risk sentiment strongly one way or another, the top and bottom of this range is likely where we’ll see technical traders jump in on reversal setups.

For bulls, a retest of the support area (between 0.6500 – 0.6530) and bullish reversal patterns is something to watch, especially if broad global risk sentiment shifts back to positive ahead of the weekend. With a daily ATR of around 110 pips, the top of the range is a viable swing target if volatility remains low, or as a day target if we see a spike in volatility.

For the bears, a retest of the top of the range and bearish reversal patterns around 0.6600 may draw in technical sellers, especially if risk sentiment stays negative heading into the weekend. Given the lower ‘highs’ pattern already forming, a scaling entry technique should be considered, starting from around 0.6580 up to 0.6600. Again, without a pop in volatility, hitting the bottom of the range would likely take more than a few sessions, so take that into consideration before putting risk on before the weekend.