Bullish speculators of the NZD/USD likely enjoyed the trend upwards last week which developed and proved to have strength. As of this writing the NZD/USD is near the 0.63350 ratio with its typical fast price action being displayed. The move higher last week has certainly been solid and the incremental steps a positive reflection based on weaker than anticipated inflation data from New Zealand last week via the Labor Cost Index, which was then followed by the U.S Federal Reserve hinting that a pause of interest rate hikes is being considered in June.
However, before bullish traders pursue the NZD/USD blindly with buying positions, short-term considerations should be kept in mind because slight reversals lower can take place. The ability of the NZD/USD to move above the 0.63000 ratio since early last Friday is noteworthy, and this price level will be looked at with a stern glance by traders who try to get a grasp on behavioral sentiment. A sustained value above 0.63000 would be looked on favorably by many bullish speculators.
Caution Flag for the NZD/USD Bulls as Fed Member Speaks Today and Inflation Data Comes Tomorrow
Traders should be aware that Federal Reserve member John Williams will speak in New York later today. Typically this would not be a major caution sign for Forex traders, but Williams is the President of the New York Fed. He will be listened to for his opinions on interest rates and the corporate banking sector. If he sounds aggressive regarding interest rates, this could send a shiver down the spines of Forex traders and have an effect on the NZD/USD in the short term.
- Tomorrow important inflation numbers will come from the U.S. via the Consumer Price Index figures.
- While the U.S. Fed has said it is considering an interest rate pause, they have given no guarantees about what they will do in June.
- If inflation numbers from the U.S. are stronger than anticipated tomorrow, this could cause some selling in the NZD/USD to happen as a reaction.
The 0.63000 NZD/USD Level should be monitored for Stability
Short-term traders may want to continue pursuing upside momentum in the NZD/USD with the belief the currency pair still has room to traverse upwards and they cannot be blamed. However, the next 40 hours for the NZD/USD may prove choppy because of the New York Federal Reserve’s President speaking and the important inflation data coming tomorrow from the U.S., which will certainly be monitored. Risk management should be in place. If N.Y. President Williams speaks ‘softly’ today and inflation numbers are weaker than expected tomorrow, the NZD/USD could power higher. Risk takers may enjoy the near term, but they need to be cautious as they wager.
NZD/USD Short-Term Outlook:
Current Resistance: 0.63425
Current Support: 0.63270
High Target: 0.63625
Low Target: 0.63090
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