I’m looking at this simple trend retracement play on the hourly chart of NZD/USD.
Will the U.S. PMI readings spur another bounce?
Or will Kiwi traders be eager to place bets ahead of the RBNZ decision?
Before moving on, ICYMI, yesterday’s watchlist checked out a range support breakdown on AUD/NZD. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Fed official George sees rates closer to 2% by August
Australian flash manufacturing PMI down from 58.8 to 55.3 in May
Australian flash services PMI fell from 56.1 to 53.0 in May
Japanese flash manufacturing PMI dipped from 53.5 to 53.2 vs. 53.8 forecast
BOJ core CPI climbed from 1.1% to 1.4% y/y in April
UBS & JP Morgan downgraded growth forecasts for China
ECB says “liftoff possible” from negative rates in July
French flash manufacturing PMI down from 55.7 to 54.5 vs. 55.3 forecast
French flash services PMI dipped from 58.9 to 58.4 as expected
German flash manufacturing PMI up from 54.6 to 54.7 vs. 54.1 forecast
German flash services PMI fell from 57.6 to 56.3 vs. 57.2 consensus
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.K. flash manufacturing and services PMIs at 8:30 am GMT
U.S. flash manufacturing and services PMIs at 1:45 pm GMT
Fed head Powell’s testimony at 4:20 pm GMT
ECB head Lagarde’s speech at 6:00 pm GMT
RBNZ monetary policy decision at 2:00 am GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: NZD/USD
This pair is starting a fresh uptrend, forming higher lows connected by a rising trend line on its hourly time frame.
Will support continue to hold with big catalysts on deck?
Flash manufacturing and services PMIs from Uncle Sam might spur additional volatility, as both sectors are expected to post dips in May.
However, the main mover would likely be the RBNZ monetary policy statement much later on. After all, the central bank is widely expected to hike rates by 0.50% in order to ward off inflationary pressures.
If that’s the case and they signal more tightening moves down the line, NZD/USD might carry on with its climb. Support around the area of interest near the 50% Fib seems to be holding so far, but a larger pullback might still reach the 61.8% level closer to .6400.
The 100 SMA is above the 200 SMA to confirm that the uptrend is more likely to resume than to reverse. In addition, Stochastic is turning higher after reaching the oversold area, indicating that buyers are ready to return.
Better watch out for a move past the swing high around .6500 if bullish momentum is strong enough!
