NZD/USD bulls are on a roll as risk sentiment moves positive. Will the momentum continue after RBNZ Governor Orr’s speech ahead?
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/NZD after the latest RBNZ rate statement, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Fed Clarida speech at 6:00 pm GMT
RBNZ Governor Orr speech at 7:10 pm GMT
New Zealand Business Confidence at 12:00 am GMT (Feb. 25)
Australia Private Capital Expenditure at 12:30 am GMT (Feb. 25)
Japan Leading Economic Index at 5:00 am GMT (Feb. 25)
What to Watch: NZD/USD
On the one hour chart of NZD/USD, we can see a clear uptrend that’s picked up speed in today’s session. After the RBNZ maintained that simulative measures would remain, the Kiwi rallied against the rest of the majors on the idea New Zealand would continue to recover faster relative to its peers.
We’ve also got a positive lean in broad risk sentiment in today’s session, helped once again by Fed Chair Powell’s reassurance that the Fed is far from taking tightening measures, and likely on the continued expectations of more stimulus coming in the U.S.
With the risk-on theme alive and well in today’s session, NZD/USD is in high probability mode that the move will continue higher. But there may be a pullback ahead with another round of commentary from RBNZ Governor testifying before Parliament later in the Asia session.
After a strong run, we could see profit taking in the Kiwi and if so, the bullish setup to watch out for is a retest of the rising trendline / broken minor resistance area around the 0.7350 minor psychological level. Bullish reversal patterns there after a pullback would likely draw in both longer-term players and shorter-term day traders looking to go with the overall trend, as long as global risk sentiment remains generally positive.
For the bears, if we see a broad shift in risk sentiment towards negative and a break of the rising trendline on the chart above, this could draw in sellers looking to take profits and/or fresh shorts looking to fade the big rally the pair has made since bottoming out around 0.7150 last week.