Daily Market Analysis from ForexMart

The New Zealand broke in the lower channel during the Monday session. Later, the trend bounced off to fill the gap then declined again. There is massive support found in the 0.71 below which triggered the market to rise again as it reached the former break level. Currently, the market is attempting to move higher as it gains momentum to reach the 0.7150 region which would hint a bullish sentiment.

The market could also retreat from this level towards the 0.71 handle once more. Overall, there will be high volatility and persist for some time in the market since the New Zealand dollar is relative to commodities market which always changes. Hence, the currency is expected to be traded with a choppy environment.

Buying on the lows is advisable for this pair and is not surprising for them to return as the trend moves in a downtrend. However, shorting this pair may not be the best move. If the price breaks lower than the 0.71 handle, the next move would be to go downward toward the 0.7050 level.

Nevertheless, the market will be very choppy driven by geopolitical risks and in consideration of its sensitivity opting the U.S. dollars as a safety currency while the kiwi being the riskier one in this pair. Volatility is also anticipated to persist in either direction it goes.

The NZDUSD rallied amid trades on Tuesday and broke the level on top of 0.7150 smoothly. The Kiwi dollar continued to search for buyers on dips and tend to handle some pullback as an opportunity to increase rate.

The market tried to touch the region above 0.72, en route 0.75 afterwards. As shown in the chart, the area around 0.71 handle provides a lot of support and regarded to be the floor of the market in the near-term uptrend. The commodity space continues to weigh on the market and the NZD seems to be the “barometer” towards the overall sentiment of futures trading. Watch closely for the commodity because it could possibly show the way.

It could be a good move to buy dips moving forward because it suits the current status of the New Zealand currency. Selling remains impossible as far as we breach under the 0.71 mark. A successful break down prompts the market to reach the range below 0.7050 which is very supportive previously, along with the 0.70 region. In any case, the market remains to be volatile, however, the moving averages came in reliable, particularly the 48-hour MA shown in green color, hence it should offer further buying opportunities.

The volatility driven market persists, but the late impulsivity indicates that buyers begin to develop more confident as it moves ahead. Moreover, the dips will provide value which is an advantage to market participants.

The GBPUSD had attempted to rally yesterday, however, retreated to the level 1.2950 to return underneath the 1.29 handle. In the past few sessions, the market appeared to have a little bit of overall bullish pressure, waiting for the results of UK elections expected tomorrow. In this case, the market will probably experience choppiness and unprepared to conduct a significant move yet. Short-term volatility is predicted along with some choppy spots but a general ascending momentum should also be anticipated. It does not mean that a pull cannot be accomplished, it only implies that longer-term charts and the range below 1.2750 should offer massive support that will surely lure the attention of the majority of market participants.

After the session on Friday, the long-term outlook for the pair shall be available as it could be very difficult from this moment and the next.

Buying the dips remains to be the best option for the Cable but the dips showed to be somewhat steep. You should have got small positions as of now and after the election results in order to acquire lesser damage that might suddenly arise.

Markets have lots of speculation regarding the election decision, therefore a cool level head should be maintained as this is crucial for the following sessions.

In the longer-term, the pair might break the 1.3050 mark as it allows the market move higher freely, or maybe reach its long-term target found at the region 1.3450.

The events happened yesterday unexpectedly wrought a slight impact against the USD/CAD, as well as to other currency pairs. However, there are predictions that it would be an explosive day yesterday due to incidents lined up while traders work late at night to secure a safe position and to keep their trades well but everything turned out to be less impressive and unexciting.

The said events are as follows; the decision of ECB to hold its rates paired with the announcement on inflation targets and increasing growth outlook, though it is obviously has nothing to do with the pair. Next is the testimony of Comey after he accused US President Trump with lots of things.

These scenarios were unable to move the dollar and any movement only indicates an insignificant strengthening of the greens that lead the USDCAD near 1.35.

In relation to the Canadian dollar, BOC Governor Poloz delivered a speech expressing his delight about the current condition of their economy. He also stated that he was comfortable regarding the price trend in the housing industry. The neutral tone strike by Poloz reflected towards the commodity-linked pair which continuously trades in a steady and unspecified direction.

Later this day, the Canadian employment figures is anticipated to be release that would likely cause volatility. If the report showed a stronger result, it would help the pair to reach the lows of its tight range close to the 1.3450 level.

The British currency has an insignificant performance during Monday opening as the Europeans came back from behind. There is a gapped in the level 1.2750 and broke down towards the 1.2650 region. The market persists to show a massive bullish pressure considering that uncertainties wrought from the election will probably influence the sterling in general.
With this, the rallies could possibly provide some selling opportunities, however, a break on top of 1.28 region signals a bullish stance. And the market will move near above the 1.29 handle. Volatility is highly expected because of the trends influenced by headlines.

The sell rallies will continue on short-term charts which give indicators of exhaustion.
In case the bearish pressure remains, the market will come under 1.25 handle and keep on struggling because of indecisions on the United Kingdom along with the interest rate hikes to be implemented by the United States later this year

There are few reasons that GBPUSD will keep to struggle and decline. A slice over 1.28 handle will favor for a buying position.

The GBP/USD pair was finally able to make some significant headway amidst a highly volatile trading session yesterday after suffering from the adverse effects brought about by the results of the UK snap elections. As the Conservative bloc failed to get the number of majority they initially aimed for, this created uncertainties and risks within the market and has put the cable pair under severe downward pressure.

But yesterday’s session served as a breather for the GBP/USD pair as uncertainties within the country’s government formation are now starting to get sorted out, thus enabling the cable pair to push past towards 1.2700 points. The talks between the DUP and the Conservatives has so far produced positive results, and it seems now that this alliance will be maintained at least until the Conservatives need to work on several issues, including government formations. One such issue is the looming Brexit talks, with Theresa May staying defiant and believing that she will be able to push through with the Brexit talks in spite of political turmoil and calls for her resignation from her current post as UK Prime Minister. However, May still has to prepare herself as she will possible be faced by several hostile EU leaders who will want to take advantage of May’s position as well as the UK’s current international standing. In addition, Scotland is again on the brink of instigating another independence referendum, and all of these risks are expected to weigh down on the sterling pound both in the medium term and long term.

For today’s session, the market will be focusing on the Fed’s next move with regards to its planned interest rate hike. If the Fed pushes through with its rate hike, then the market will be looking at the FOMC statement next in order to look for clues with regards to the schedule of the next rate hike. If the statement comes out as bullish, then the dollar could further increase in value and the sterling pound might again drop and could possibly revert to its range lows.

The U.S. dollar against the Japanese yen moved unsteadily during Thursday session followed by a rally as the market sees a “risk on” environment. For now, it looks like the market will remain unpredictable and the market reaction in the overall risk appetite will be the main driver of the trend.

Traders should take into consideration the other Yen pairings which will most likely move in the similar direction. Currently. The market aims for 111 level which has been formerly resistive. It seems that the market broke the psychological level and their next target would be around 112 and 112.50 levels or higher.

Pullbacks may open opportunity for buyers as the 110 level is reached which has been a significant psychological level in the past. It seems that the pullbacks would be extended longer which gives more value for the pair. This is beneficial to gain momentum in the pair while everyone is waiting for a better value.

There has been a sell-off for the pair as the market reacted to the Federal Reserve’s decision. It came out different than expected as the Fed lean to the hawkish side which consequently strengthens the U.S. dollar which moves almost always contrary to the Japanese yen as one of the highly sensitive pairs in the market.

The Kiwi dollar break up to the upside amid Thursday trading hours and cut through over the region 0.7250, touching higher up to 0.7270 area, however, retreated to 0.7250 mark by which buyers have seen to make its entry towards the marketplace.

As the 24-hour exponential moving average still offer support causing the New Zealand to attract the attention of the buyers but pull back is required in order to meet those buyers.
The target is the level above 0.73 and when the commodity sector could at least make some recovery, it could further support the NZD.

Having said that, a consolidation will form between the 0.72 and 0.73 levels. Basically, we are on top of the “fair value” which indicates that buyers are nearly able to direct the market.
Ability to break on top of 0.73 will enable the market to crept higher and it may take some time to do so.

Moreover, the national currency of New Zealand Dollar appeared to be the strongest among other commodity currencies which have the possibility to keep going.

As a buyer, we recognize the breakdown under 0.72 area which is negative and has the potential to revise the overall projections.

The 0.75 level remains to be the target In the longer-term, even though it may take quite some time, the longer-term traders still believe that it will happen soon. With this, the market persists in buying the dips.

The USD/CAD pair remains confined within its previous trading range of 1.3200 and 1.3300 points as there were no major events yesterday that could have swayed the current stance of the loonie. As the US dollar has been gaining more and more momentum due to the release of a positive durable goods data, this has been subsequently countered by an oil price surge on the side of the Canadian dollar, and this is why the USD/CAD pair has been in a deadlock as these events have cancelled out the effects of one another.

Oil prices are still consolidating within its price lows but tension within oil-producing countries has lent some additional support for oil prices, enabling them to surge at over $43 per barrel. Since the loonie is highly dependent on oil prices, the USD/CAD pair is then expected to increase subsequently in line with the increase in oil prices. The Fed chose to brush off the weak data coming from the US economy and still went ahead with its planned rate hike, but the market is not yet sure of the timing of the next rate hike since the dollar strength has not yet established itself as far as traders are concerned. This is why the market is now closely monitoring the incoming readings from the US in the short term in order to determine if the Fed is correct with its assumption that the US will be set to release a slew of positive data. If indeed these data comes out as positive, then the dollar strength should further increase as well.

For today’s trading session, Janet Yellen is set to make a statement within the day but the USD/CAD pair is expected to remain consolidating within its previous trading range.

The USD/CAD broke through the support level 1.32 amid trades in the past 24 hours following the strength from the Loonies and sluggish dollar witnessed by the entire market.
Making it possible for the pair to trail near the 1.31 area, en route to 1.30 in the near-term. The next bounce could probably be seen at 1.30 level.

The greenbacks lost steam due to delay from the healthcare reform bill with increasing concerns that the bill should be revised. Another thing to consider is the possibility that the reform will start hitting roadblocks that could make policy decisions a much tougher task. Apparently, this is negative for the American currency and the upcoming data from the US seems to be bad after several weeks. The USD suffers in spite of the efforts of the Fed for not paying attention to the negative data, as well as to bolster the greens.

Moreover, Canadian data indicated an uptrend in the economy of Canada which is reflected from the CAD’s value which is further recognized by the Bank of Canada. According to BOC, the time for rate reduction is over since it signaled a hawkish stance which shows that they remain on hold in the near-term and plans to employ rate hike during the medium and long-term. Having said that, the Loonies bolstered along with the steady increase in oil prices that started earlier this week. The Canadian dollar had progress with increasing success causing the USDCAD to move lower.

Ultimately, we expect no major news from US or Canada, however, the US inventory statistics for oil is anticipated that could affect oil cost and could further weigh on prices of the commodity-linked pair.