USDJPY Headed for a Further Dip, While NZDUSD Set to Advance
USDJPY Symmetrical Triangle | Support at 117.75
USDJPY made higher lows and lower highs, consolidating inside a symmetrical triangle chart formation on its 1-hour time frame. The pair is testing the bottom of the triangle, which could hold and lead to a bounce back to the top of the formation at the 118.25 level.
A breakdown, however, could lead to losses of as much as 200 pips, which is the same height as the chart pattern. This could lead to a move down to the 115.00 major psychological level if sellers take control of price action. Similarly, an upside break past resistance could mean more gains for the pair, possibly until the next major resistance mark at 120.00.
US GDP came in stronger than expected, as the figure was upgraded from 3.5% to 3.9% instead of the estimated downgrade to 3.3%. For today, US durable goods orders data is due and strong improvements could lead to renewed demand for the US dollar.
There are no reports up for release from Japan today, leaving the yen sensitive to market sentiment. Bear in mind though that the BOJ is still biased towards further easing in an effort to ward off deflation and potentially weak growth, so the path of least resistance is to the upside.
NZDUSD Short-Term Retracement | Support Turned Resistance at .7850
After breaking below a key support zone, NZDUSD fell below the .7800 major psychological level before recovering slightly. Price is pulling back up to the .7850 minor psychological mark, which lines up with the 38.2% Fibonacci retracement level.
Stochastic is moving up, reflecting the presence of buying pressure. This could even lead to a higher retracement, possibly until the .7900 handle or the 61.8% Fibonacci retracement level. Once the selloff resumes, price could dip back to the .7800 mark or perhaps create new lows.
There are no reports due from New Zealand today, although risk aversion might continue to keep the downtrend intact. As for the US, durable goods orders are up for release and might lead to more dollar demand if the actual data comes in strong.
Falling milk prices have recently weighed on Kiwi movement, as this led to speculations that milk payouts will be downgraded once more. This could lead to weaker consumer spending down the line and more Kiwi weakness, which would be in line with the RBNZ’s plan to keep their currency weak
GBPNZD Bearish Divergence | Resistance around 2.0000-2.0100
GBPNZD has recently pulled up to a broken support zone around the 2.0000-2.0100 major psychological level. Price could find resistance here, as it lines up with the 38.2% Fibonacci retracement level.
Stochastic is indicating overbought conditions, which suggests that pound bears could take control of price action soon and lead to more declines for the pair. The UK second GDP estimate is up for release and no changes to the previous 0.7% reading is expected. Downgrades could lead to a sharp selloff for GBPNZD.
In fact, a shallow bearish divergence can be seen, as price made higher highs and stochastic made lower highs. This supports the bias that GBPNZD might resume its drop, possibly until the previous lows at the 1.9700 major psychological handle or even lower.
There are no reports up for release from New Zealand today, which suggests that the Kiwi could be driven by market sentiment. Last week, the surprise rate cut by China’s central bank provided a bit of relief for the commodity currencies and risk appetite but this sentiment appears to be fading for now.