So it looks like the Fed isn’t tapering or tightening any time soon.
Can the bulls use this to extend NZD/USD’s uptrend?
Here’s a setup that I’m looking at:
In case you missed it, Fed Chairman Powell dropped the hammer on the dollar when he said that now’s not the time to start talking about tapering the central bank’s asset purchases.
The prospect of prolonged easy monetary policies took its toll on the safe-haven dollar and boosted high-yielding comdolls like the Kiwi.
Asian session traders initially went with the memo and NZD/USD ended up breaking an ascending channel resistance but a round of profit-taking eventually dragged the Kiwi lower.NZD/USD is now at the .7250 minor psychological area that lines up with the broken channel resistance and the 38.2% Fib retracement of the latest upswing.
Are there enough bulls to extend NZD/USD’s rally?
The U.S. will be printing its advance Q1 2021 GDP report and traders are betting on strong growth numbers.
If Uncle Sam shows stronger-than-expected growth, then the combo of optimism in the world’s largest economy and easy monetary policies can translate to buying riskier bets like equities and the comdolls. NZD/USD could revisit its daily highs and even make new April highs.
But if U.S. economic growth disappoints, then a lot of bulls can “taper” their global growth optimism and maybe take profits from their high-yielding trades. NZD/USD could dip to the lower Fib levels or even retest the mid-channel and 100 SMA areas.
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