Will NZD/USD Buyers Keep the Bullish Momentum Going?
The NZD turned bullish in early November, as the USD turned bearish on softer FED remarks while risk sentiment turned positive, sending commodity dollars higher. This pair was on a long-term bearish trend which has sent the price above moving averages on the daily chart, and buyers have pushed the price back above them, which might be turning into support, as they should if buyers want to keep the bullish momentum going.
Buyers took control in November, sending out some optimistic indications and they pushed the price above 0.60, reaching 0.6214 early this month. Inflation in New Zealand has been slowing, which has led to the RBNZ holding the official cash rate at 5.50% last week, and markets are convinced that there won’t be any further hikes coming up.
Nonetheless, US inflation is dropping, and the labor market is showing signs of weakness. Last week the first two employment reports from the US came in pretty weak, which sent the USD lower, but the reports released toward the end of the week turned out quite strong, so the situation in the US is mixed and traders will likely stay on the sidelines until the FOMC policy meeting on Wednesday evening.
However, in New Zealand, the economic situation is not any better, if anything. This month we saw a further decline into contraction in both the Manufacturing and Services PMIs from New Zealand. Besides that, the Chinese PMI reports for November also came in weaker, with fuel imports falling as well last month, which is an indication that the Chinese economy is not recovering too fast. So, for now, we’ll see if the 200 SMA (purple) holds on the daily chart until the FED meeting. Then, we will decide according to the outcome of the meeting and if it is negative to the USD, then we might decide to go long here.
NZD/USD Live Chart
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