I’m looking at this simple break-and-retest play on the short-term chart of NZD/JPY.
Do you think risk appetite will sustain the rally?
By the way, in case you missed it, I’ve summarized last week’s market moves in my Weekly Forex Market Recap. Check it out so you’ll know the last major headlines!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- Australia’s building approvals down by 8.6% vs. projected 9.9% drop
- Chinese Caixin manufacturing PMI up from 51.9 to 52.0 vs. 52.1 consensus
- RBA kept interest rates on hold at 0.10% as expected
- RBA more optimistic about pickup in employment
- RBA highlights uncertainty from virus outbreaks but stays upbeat about vaccination
- Iron ore rebounds on talk of easing curbs in Tangshan
- Germany looking to ease COVID-19 restrictions soon
- Asian shares advance ahead of U.S. jobs data, gold and oil higher
Upcoming Potential Catalysts on the Economic Calendar:
- OPEC-JMMC meetings ongoing
- Canadian monthly GDP at 12:30 pm GMT
- Canada’s manufacturing PMI at 1:30 pm GMT
- U.S. ISM manufacturing PMI at 2:00 pm GMT
- BOE Governor Bailey’s speech at 3:00 pm GMT
- FOMC member Brainard’s speech at 6:00 pm GMT
What to Watch: NZD/JPY
This pair recently busted through the ceiling around the 79.00 handle and is pulling back from its rally.
Are buyers ready to hop in soon?
The Fibonacci retracement tool shows where Kiwi bulls are likely hanging out. A bunch of ’em might be waiting to go long at the 50% level, which coincides with the former resistance at 79.00.The 100 SMA is above the 200 SMA to confirm that support levels are more likely to hold than to break, and this faster-moving MA is holding as dynamic support at the moment.
However, Stochastic is still heading south, so there could be room for NZD/JPY to move lower before buyers take over.
Even though there are no major catalysts on New Zealand’s schedule this week, the Kiwi might stay supported thanks to the RBNZ’s shift to a more hawkish stance in their latest statement.
Meanwhile, Japan continues to struggle with another wave of COVID-19 cases that prompted the government to extend the state of emergency in some cities. Heck, there are speculations that the Tokyo Olympics might have to be cancelled because of this!For now, I’m counting on a pickup in risk-taking to convince Kiwi bulls to charge soon, possibly taking NZD/JPY back up to the swing high at 80.20 or higher.
