NZDUSD Potential Reversal Zone – Probable Price Path
NZD: The U.S. dollar hit a record low and supported commodity currencies such as the New Zealand dollar. The short-term resistance of the New Zealand dollar against the US dollar is at the 0.68 mark, and the support level is at the low of 0.663 on August 28. The New Zealand dollar strengthened against the US dollar for most of the day. It rose 0.3% to 0.676, a record high in more than a year. The US dollar’s decline at the end of the New York session narrowed, and the New Zealand dollar closed nearly 0.2% to 0.673. The New Zealand dollar rose 1.6% in August, rising for five consecutive months, rebounding 0.181 cumulatively from its low in March Central Bank Governor Orr will deliver a speech tomorrow to discuss the central bank’s monetary policy measures to cope with the coronavirus epidemic. The market is concerned about whether he will talk about the implementation of negative interest rates or comment on whether the current exchange rate of the New Zealand dollar is too strong. New Zealand’s July building permits fell 4.5% month-on-month, after increasing 0.7% in June
USD: The market expects that the Federal Reserve will continue to relax its policies. The U.S. currency exchange rate fell by nearly 0.4% at one time and fell below the 92 mark, setting a new low for more than two years. U.S. 10-year Treasury bill yields closed down nearly 2 basis points to 0.705%. Fed Vice Chairman Clarida said that the federal funds target rate has dropped to zero, and the forward guidance and asset purchase plan will continue to support the economy. The committee members may discuss how to adjust the forward guidance at the September interest rate meeting. In addition, he believes that it is not suitable for the committee to adopt yield curve control operations and reiterated that he has no intention of implementing negative interest rates.US Treasury Secretary Mnuchin revealed that Senate Majority Leader McConnell may announce a revised round of rescue measures next week. Speaker of the House of Representatives Pelosi pointed out that there are still many practical problems with the Republicans regarding the new round of relief measures. White House trade adviser Navarro said the government plans to restrict more apps with Chinese background
From a technical and trading perspective, the NZDUSD looks poised to make a third test of ascending trend line resistance at the .6800 handle, this test coincides with developing momentum divergence as such bears quill be watching for intraday and daily reversal patterns to deploy short positions looking for a move back to test ascending trendline support towards .6570. A daily close above .6820 would negate the corrective thesis opening a move to test the psychological .7000 handle
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