Holding on to NZD Shorts Ahead of Employment Report
The New Zealand dollar began to decline in July when risk assets such as commodity currencies fell against the US dollar and have been declining for more than three months. Despite the fact that the NZD has been holding up well and trading in a range since early September, with a support zone below 0.59. The Chinese economy’s downturn was dragging on risk assets, but we have just seen some progress.
On larger timeframe charts, we can see that NZD/USD continues to remain bearish and the bullish retrace higher seems to have stopped at the 50 SMA (yellow). That is an indication of diminishing momentum, which is frequently followed by pullbacks or reversals. As risk sentiment worsened, the pair recently drew back into the broken support turned resistance below 0.59 and plunged to fresh lows.
We decided to open a sell forex signal here last week as the price was slipping lower, which is still live. From a risk management standpoint, sellers will have a much superior risk to reward setup by leveraging the key trendline, although picturing such a large rise at the time is difficult.
NZD/USD recovered some of its recent losses on Friday, trading at 0.5847 during Monday’s Asian session. The NZD/USD pair gained momentum, aided by the US Dollar’s (USD) comparatively weak performance following the release of the Core Personal Consumption Expenditures Price Index data from the United States (US).
However, the 50 SMA (yellow) stopped the retrace. New Zealand Dollar (NZD) has been under pressure following the recent release of soft headline Consumer Price Index (CPI) data, which may lead traders to expect the Reserve Bank of New Zealand (RBNZ) to take a more accommodating stance on interest rate hikes, contributing to the Kiwi pair’s weakness.
Investors are looking forward to the announcement of the Employment Change and Unemployment Rate for the third quarter, which is planned for later today. The unemployment rate is expected to jump by 3 points, so we are holding on to our sell signal here.
NZD/USD Live Chart
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