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Not much in the way of headlines and volatility, but we did see a bullish spike in NZD on the session. That brings us to NZD/JPY, which may draw in technical traders and risk sentiment traders.

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Fresh Market Headlines & Economic Data:

Stocks cut gains after hitting fresh record highs

The S&P CoreLogic Case-Shiller National Home Price Index rose 8.4% as sales hit a 14-year high

Oil rises on hopes U.S. pandemic stimulus will spur fuel demand

European stocks extend gains as Brexit deal boosts UK markets

After Four-and-a-Half Years, Brexit to Become U.K. Law in a Day

Upcoming Potential Catalysts on the Economic Calendar

U.K. Nationwide Housing Prices at 7:00 am GMT (Dec. 30)
Spanish Inflation Rate at 8:00 am GMT (Dec. 30)
U.S. Mortgage Applications at 12:00 pm GMT (Dec. 30)
U.S. Trade Balance at 1:30 pm GMT (Dec. 30)
Chicago PMI at 1:45 pm GMT (Dec. 30)
U.S. Pending Home sales at 3:00 pm GMT (Dec. 30)

What to Watch: NZD/JPY

NZD/JPY 1-Hour Forex Chart
NZD/JPY 1-Hour Forex Chart

On the one hour chart above of NZD/JPY, we can see the pair just broke above a minor resistance area around the 74.00 handle. There doesn’t appear to be a catalyst for the spike higher on the New Zealand dollar, so it could be technical players at work and/or broad risk sentiment at play.

With not much going on in terms of major catalysts ahead, and with the end of 2020 quickly approaching, we’re checking out the break for a potential pullback as stochastic indicates short-term over bought conditions.

If the pair does retest the 74.00, we’ll be on the look out for bullish candle patterns and support for a potential short-term long position. But unless with get another catalyst for a broad risk-on move (i.e., U.S. Senate approves additional stimulus maybe?), the move higher is likely limited.

But if the market fails to maintain above the 74.00 handle, and we get a catalyst to sour broad risk sentiment (e.g., no additional stimulus, broad equity profit taking ahead of end of year, etc.), then this break could be a fakeout. A fall here could attract more sellers, especially if we see a break below the rising trendline marked on the chart above.