The dollar has been trading firmly so far today. USDJPY edged out a fresh two-month peak at 113.39, with the pairing now racking up a fairly impressive winning streak, climbing in every session bar three over the last three weeks, lifting out of the six-month low that was posted at 108.12 in mid April. Over this period we have seen Fed revive monetary tightening guidance, with markets now pricing in a 25bp rate hike at next month’s FOMC, and global investor sentiment rise as it became clear that pro-EU Macron was likely to win, as has proved to be the case, the French presidential election. EURUSD, meanwhile, logged a three-session low at 1.0922, extending the “on-the-fact” decline following the French election.
The NZDUSD also looks interesting and preparing to move and possibly break out, the question is the direction. It’s a wait and see over the next few days. The price action is compressing into the pinnacle of the triangle, break to the upside could be to the 0.7000 level and beyond, the 0.6900 level needs to hold to confirm the upward potential. Resistance will be around the 20 DMA and 23.6 Fibonacci zone at 0.6955-0.6970. A break and hold lower of the 0.6900 level could test the recent lows under 0.6840.
The Weekly and Monthly time frames remain biased to the downside. Discipline and patience remain key attributes for the successful trader, regardless of their trading time frame. The NZDUSD Daily chart is on the watch list.
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Senior Market Analyst
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