NZD/USD makes it to today’s watchlist as the pair breaks consolidation on news catalysts with fresh momentum.
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Fresh Market Headlines & Economic data:
- Yen, Swiss franc rise after Pakistan shoots down Indian jets
- Trump and Kim meet face-to-face in Vietnam as second summit kicks off
- Pending home sales rebound 4.6 percent in January, but they’re still lower than 2018
- The U.S. international trade deficit was $79.5B in Dec., up $9.0B from $70.5B in Nov.
- Theresa May says Britain can still leave EU on 29 March
- Brexit: Which amendments have been tabled by MPs?
- Euro Area broad monetary aggregate M3 decreased to 3.8% in January 2019 from 4.1% in December 2018
- Weidmann Says Market View on ECB Rates Plausible Amid Weak Data
- Australian construction work digs a hole for the economy in fourth quarter
- New Zealand Trade Deficit NZ$914 Million In January
Upcoming Potential Catalysts on the Forex Calendar:
- Fed Chair testifies on Monetary Policy Report to House Financial Services Committee at 3:00 pm GMT
- Japan industrial production and retail sales at 11:50 pm GMT
- New Zealand ANZ business confidence at 12:00 am GMT (Feb. 28)
- Australia private capital expenditure at 12:30 am GMT (Feb. 28)
- China manufacturing and non-manufacturing PMI at 1:00 am am GMT (Feb. 28)
What to Watch: NZD/USD
After consolidating around 0.6900 for the past couple of trading sessions, NZD/USD is finally making a move lower. The spark is likely a combination of the recently released New Zealand trade data showing the largest deficit on record for a January month, and possibly on weak Australian construction data showing weakness in the region. Another argument could be a rise in geopolitical tensions as India and Pakistan makes claims of shooting down each others’ jets.
Whatever the case may be for the fresh momentum lower, it’s a move that definitely makes the watchlist or even a new trade idea at this point. For the bears, the next potential support area is likely the 0.6800 major psychological level, which is within the daily ATR of around 50 – 60 pips. So it’s reachable within the session if momentum stays strong and if not this session then the next, especially if the upcoming New Zealand business confidence data comes in weak.
And with such a strong move already for the session, conservative types may want to wait for a bounce higher back to the consolidation area before playing the new move lower. This entry strategy would improve your potential return-on-risk but you may miss out on the move, so it’s something to weigh out.
For the bulls, you definitely need a strong catalyst, which could likely come from the aforementioned NZ business confidence data or a fresh positive geopolitical development like with the U.S.-China trade story. If there is a big turn around, a break above the consolidation area around 0.6900 is the safest entry since traders may not consider going long until it can sustain above that area. Otherwise, the opportunity to go along may not come until a retest and reversal of the 0.6800 area if the pair continues to drop.