NZDUSD Make or Break – Probable Price Path
In the week ahead, the now-usual host of timely partial indicators will again be a focus as we try to come to grips with the evolution of the economy. Amongst these will be Wednesday’s weekly merchandise trade and demography data sets and Tuesday’s employment indicators. We’ll also be looking out for Z’s weekly sales update mid-week and MarketView retail sales figures. The monthly data are also now becoming more interesting with April’s numbers starting to make an appearance. Tuesday we get merchandise trade data and new residential lending for the month. Thursday is consumer confidence and, on Friday, credit aggregates for April are released. All of these cover the month of most extreme lockdown so the data won’t be buoyant. Equally lacking in buoyancy will be the results of Tuesday’s ANZ Business Outlook. As has become the norm, we have already seen the results of the first responders to this survey. Consequently, the interest in this “final” rendering will be in the detail rather than in the headlines. Accordingly, markets are unlikely to be overly-interested in the outcome. RBNZ watchers should keep an eye out for the Wednesday release of the Bank’s latest Financial Stability Review. It will be interesting to see what the Reserve Bank’s judgments are with regard to the impact on the banking system of Covid-19
From a technical and trading perspective, the NZDUSD is testing pivotal projected ascending trendline resistance ahead of the .6300 handle. Momentum studies are similarly testing trendline resistance. Bears will look for a key reversal pattern to develop from current levels to close below the near term volume weighted average price currently sighted at the .6200 handle a close below here should see bearish exposure rewarded, initially targeting a test of .6100 monthly pivot, as the .6300 level continues to cap they it is reasonable to expect a three wave decline to ultimately yest the .6000 handle and pivotal decision point for the next leg higher en route to the primary equality objective at .6433. On the day a closing breach of .6300 would suggest that prices will grind higher to imminently test the equality objective before a corrective phase will develop.
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