Article by ForexTime
The New Zealand dollar has come back into the fray recently, as it looks to be making a push higher on the back of a weaker USD. This has been led in part by the USD weakening as the US Congressional Budget Office has forecasted that by 2020 the budget deficit will be $1 Trillion. This has further compounded the already weaker US dollar position in the market, which continues to show no signs of letting up. However, any flight in the markets is causing USD rallies and lifts in safe havens (JPY, CHF). For the most part though it’s likely that markets will continue to hammer the USD as it posts sub-par economic data and also republicans put pressure on the current fiscal position.
Looking at the NZDUSD it continues to look higher from its current position. And with two major trend lines at play in the market, it could certainly be the case that we see it look to jump higher in the lead up this week. At the top level we have a long term bearish trend line which will obviously be a factor for traders looking for levels to exist at. On the bullish side we have a short term trend line which is likely to come into play, but not at present. Today’s push saw the bulls touch on resistance at 0.7323 and it’s likely we could see further touches after support at 0.7171 was able to hold off any further movements lower. In the event the bulls do drive things forward I would expect strong resistance at 0.7405, which also coincides with the bearish trend line coming down from above. If we did see a breakout here then I would most certainly see it as a very bullish signal.
The Canadian dollar has been making big waves on the markets and has been one of the most volatile in the Monday trading session. I’m not surprised given the great technical patterns we are seeing and of course the NAFTA talks adding further pressure that things will improve once some uncertainty is taken out of the equation. Adding further spin to the mix was the Business Outlook Index showing a lift to 16 (8 prev) which seems to show that things are improving and we could see the Canadian economy pick up more as NAFTA looks to get sorted, and potentially may event benefit more from any trade wars the US has with China.
On the chart the USDCAD has shown a strong head and shoulders pattern which I touched on last week, as the bears took control on a strong CAD. After crashing through the neck line traders have pushed down to support at 1.268, and there is a real battle here between the bulls and the bears. The 200 day moving average is probably the next level in this fight, with the potential to even go lower to support at 1.2548. The question now remains how much more fight do the CAD bulls have in them, as to me it looks like they may be getting stronger.
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Article by ForexTime
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