NZD/USD capped at 0.6940, bearish head-and-shoulder in the making
|- NZD supported by the jump in gold. The dismal geopolitical picture is prompting precious metal bulls to rush to gold in a flight to safe-haven assets.
- The US Dollar remains strong as investors expect a rate hike at the next Federal Reserve Bank meeting in June.
The kiwi is trading in a tight range for the third consecutive day. NZD/USD is currently at around 0.6920 down 0.10% on Friday as the market is creating a bearish head-and-shoulder formation.
NZD is mimicking its big brother, commodity-linked currency AUD, which has been supported by stronger gold prices this week. In fact, traders rushed to the metal as the geopolitical picture worsened progressively as the week went on.
It started with the news that the US-China trade war was “put on hold” and this put a floor on gold. After which the news of 25% tariffs on imported vehicles to the US and finally the cancellation of the Trump-Kim meeting saw gold jump above $1,300 a troy ounce.
On the NZD macroeconomic front, the data has been rather poor and “the Reserve Bank of New Zealand (RBNZ) is widely expected to hold off on any rate increases until well into 2020, with some market participants believing there are even chances of a further rate cut,” wrote FXStreet’s own Joshua Gibson.
On the other hand, the US Dollar is relentlessly creeping higher as investors widely expect the Federal Reserve Bank to raise interest rates in June and at least another time this year.
NZD/USD 4-hour chart
NZD/USD is trading below its 100 and 200-period simple moving averages (SMA) on the 4-hour time frame suggesting a downward bias. The 0.6900 handle is acting as support and resistance as the market has used the level as main pivot in recent days. A break below the 0.6900 level should bring the market to 0.6851 swing low followed by the 0.6800 figure. To the upside, bulls should meet resistances at 0.6940 supply level and at 0.6975 swing high. Additionally, the bearish head-and-shoulder formation might send Kiwi lower but bears will need to overcome the rather strong 0.6900 handle.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.