NZD/USD has been in a solid trend higher, and today’s pullback may be an opportunity for the bulls to play at slightly better prices.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on USD/JPY as it grinds lower, so be sure to check that out to see if there is still a potential play!
| Equity Markets | Bond Yields | Commodities & Crypto |
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DAX: 13994.58 +0.74% FTSE: 6843.70 +0.03% S&P 500: 3804.69 +1.51% NASDAQ: 13008.57 +2.11% |
US 10-YR: 1.083% +0.041 Bund 10-YR: -0.55% -0.005 UK 10-YR: 0.288% +0.042 JPN 10-YR: 0.042% +0.025 |
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Fresh Market Headlines & Economic Data:
Stocks hit record highs, Nasdaq tops 13,000 for the first time
Oil touches fresh 11-month highs after U.S. inventory fall
JP Morgan Global Composite PMI: Global economic recovery continues at end of 2020
U.S. Initial jobless claims: 787,000 for the week ended Jan. 2, the Labor Department reported.
ISM Services PMI rises to 57.2 in December vs. 55.9 in November
Canada Ivey PMI falls to 46.7 in December 2020 vs. 52.7 in November 2020
Canada trade deficit narrows to C$3.34 billion in November
BOE Governor Bailey warns Brexit will bring big economic losses
German manufacturing in November 2020: new orders up 2.3% on the previous month
Downturn in eurozone construction continues in December
Volume of retail trade down by 6.1% m/m in euro area; Down by 5.0% m/m in EU
Euro area annual inflation stable at -0.3% in December 2020
Euro area economic confidence rises despite new virus curbs
Upcoming Potential Catalysts on the Economic Calendar
Fed Bullard speech at 5:00 pm GMT
Fed Evans speech at 6:00 pm GMT
Japan Household spending at 11:30 pm GMT
Japan Leading Economic Index at 5:00 am GMT (Jan. 8)
What to Watch: NZD/USD
On the one hour chart above of NZD/USD we can see a pretty clear uptrend, which has been a non-stop move since the beginning of November 2020. And with every slight dip, it has been an opportunity for USD bears to start new short USD positions or add-on to current ones.
Yesterday, we saw the Greenback bounce, possibly a risk aversion move by traders in reaction to chaos in Washington, D.C. yesterday, bringing NZD/USD to a previous area of minor resistance just above the 0.7200 major psychological level.
The question now is whether or not this will be another buying opportunity for NZD/USD bulls, or are we in the process of a USD bounce back on risk aversion flows?
Of course, we can’t see the future, but with the markets leaning bullish on risk and bearish on the Greenback as we’ll likely see more stimulus from the Biden administration, the odds are still in the favor of USD bears for now.
If you’re leaning in that camp, watch out for bullish reversal patterns from current levels (around 0.7250) d0wn to the rising ‘lows’ pattern marked on the chart above before considering a long position.
Or for the more aggressive traders, considering scaling into a long position with a tight stop to reduce the risk of missing the trade if you think a deeper pullback lies ahead.
For the bears, it’ll take a big shift in broad risk sentiment towards negative before the market sees a bearish opportunity on NZD/USD, which may come but not likely by the end of today’s session.
