There have been some attractive zones offering support and resistance on this pair recently which will be looked at below but first let’s start on the daily time frame to get a general idea of how this pair has been trending.
On the daily time frame, we can see that the overall trend here is bearish which can be spotted when looking at the descending trend line plotted which we’ve had 3 touches off of already. We had that huge spike to the downside when the dollar was treated as a safe haven at the beginning of the pandemic. Since then, price has made higher highs and higher lows but the third rejection off of the trend line could indicate further downside movement.
Looking on the 4 hour time frame, we can see how the previous resistance turned to support after higher highs were made by looking at the highlighted rectangle. After the third touch of the trend line shown by the elipse, structure was broken to the downside where a lower low was created shown by the upward pointing arrow and then price then went on to print a lower high shown by the downward pointing arrow. Dropping down to the 1 hour time frame below we can see the price action more clearly.
We can see that the lower high created actually formed a head and shoulder pattern shown by the zone drawn at 0.66900. With the neck line shown by the zone drawn at 0.66250, we have rejected that area twice already but currently trending in a tight range between the neck line and the next level of support.
From a fundamental perspective, the Reserve Bank of New Zealand will be releasing a Monetary Policy Statement as well as a Rate Statement tomorrow, with their interest rate decision being released as well. Their outlook is likely to remain dovish which means they are willing to reduce interest rates and even consider negative rates which will be something to look out for in the near future. On Friday, their Business PMI’s will be released which will give us more insight in to how well the manufacturing sector performed recently. From the US dollar perspective, their PPI’s will be released later today as well as their Weekly Crude Oil Stock. On Wednesday, the most noteable data releases to look out for will be the CPI’s, Crude Oil Inventories as well as the WASDE Report which gives estimates of the supply and demand within the agricultural sector. There have been talks of new stimulus packages to be implemented by Trump but without the approval of Congress, no agreement has been made yet.
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