NZDUSD At Dynamic Resistance Ahead of The ISM Non-Manufacturing and NFP
NZDUSD made a new high when compared with the pre-pandemic levels. Just like other USD pairs did, it recovered all the losses due to a weak dollar across the board.
However, it lags the price action seen in other pairs like the EURUSD or the AUDUSD. But because it made a new high, the market may be due for a correction. The USD began correcting since Phillip Lane, the ECB’s Chief Economist, said that the EURUSD rate matters for the ECB. Verbal intervention sent the EURUSD lower two hundred points from 1.20, and the other USD pairs followed – NZDUSD was no exception.
Traders Looking for Direction Ahead of ISM Non-Manufacturing Later Today
During the pandemic, the news out of New Zealand matters less for the NZDUSD pair’s evolution. It was all about the USD and USD flows.
As such, investors focused on what the Fed did, how the labor market in the United States performed, and how long it will be until the economy recovers. After all, the USD weighs more in the NZDUSD pair if only comparing the importance of the two currencies – one is regional, the other one global.
The ISM Manufacturing took traders by surprise Tuesday as it came out better than expected. The USD continued trading with an offered tone, but this time might be different due to the reversal that took place after Lane’s comments.
NZDUSD Technical Analysis
Ahead of the ISM Non-Manufacturing report and the NFP tomorrow, the daily timeframe on the NZDUSD pair looks bearish. Yes, the pair kept pushing for new higher highs, and it did not stop until it made a new high for 2020.
But this high is made against dynamic resistance. Moreover, a bearish divergence with the RSI spells troubles for further advances.
Consider staying short for the series of higher lows to be broken. That is 0.6450 as target. To find out the appropriate stop-loss, measure the distance from the entry price and the target, and divide it by two. Finally, project it to the upside from the entry level. This way, a 1:2 risk-reward ratio is obtained.
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