Decided to close down my my NZD/USD short earlier as both price and market drivers say dollar bears are likely to be around for a bit. Here’s a quick review.
Back at the end of February , I shorted NZD/USD at the top of a major resistance area in hopes to play my bias that the U.S. economy is outperforming New Zealand’s economy, and that the currency will be supported by the expected rate hike schedule of the Federal Reserve vs. the expectation of no tightening from the Reserve Bank of New Zealand.
Since then, it’s been pretty choppy as the pair’s price action began to tighten, basically trading between .7200 and .7300 through the first half of March. And just when it looked like the bears were finally going to be able to break through the support, a big sentiment shift came for the Greenback after Trump announces anti-China tariff’s near the end of the March. This brought on a wave of USD selling on fears of what a trade war with China may do to the U.S. economy, and it still goes on today.
I thought with trade war rhetoric between the U.S. and China very unstable, we could get another round of risk-off sentiment to provide a tailwind for my position, but with trade war fears waning and a break in pattern of lower ‘highs’ in price action, I decided that this trade was invalidated and closed down the trade manually (.7355) this morning for a very small loss:
Total: -121 pips/ -0.30% loss on 0.50% risk
I’m still fundamentally bullish on the Greenback over the Kiwi, but with geopolitics playing such a big role in market sentiment lately, especially the U.S. dollar, I’m going to stay in watch mode on USD pairs, with exception to USD/JPY because I still have an open short position there. I may adjust that soon but for now it’s more likely to better hold given the current environment.
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