With Australian CPI just ahead, here’s a simple setup I’m keeping an eye on in case the report comes inline with recent global inflation trends.
Lower Highs on AUD/NZD?
To me, odds are that we’ll get another weaker read from this upcoming Australian quarterly release, and if that happens, I think that could be the catalyst that really has Aussie bulls thinking twice about staying long as it lowers the odds of any “rate hike” talk, at least in the short-term.
And I’d like to pair this idea with the New Zealand dollar, which actually shook off its own weak CPI reading last week. I think the Kiwi’s relatively higher yield has helped play a role in its relative strength, so it makes sense to me that if the Aussie takes a hit, the Kiwi could be one of the bigger benefactors in the short-term.
With that said, no orders for now, but I’m definitely watching to see if that area around 1.0800 (previous area of interest and lower “highs” area) is retested and holds as resistance. Stochastic says we’re likely seeing overbought conditions now, and if so, I’m jumping up in there!
So, be on the lookout for a new trade idea in the next session or two, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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