NZDCAD has been moving inside a long-term descending channel visible on its daily time frame. Price just came off a test of the range resistance and is making its way back down.
For now, the pair is stalling at the mid-channel area of interest, which coincides with the 200 SMA. The 100 SMA is above this long-term MA so the path of least resistance might be to the upside and a test of the resistance could take place again.
In addition, stochastic is indicating oversold conditions so sellers might take a break and allow buyers to take control. Similarly, RSI is pointing up from the oversold area suggesting a return in bullish momentum, with a shallow bullish divergence.
A rally could reach the top of the channel at the .9400 major psychological level while a selloff could last until the bottom at .8400. This might hinge on the fundamental bias for each currency, as the risk-on environment is currently favoring the commodity currencies.
Data from New Zealand has been relatively upbeat, with the latest dairy auction reflecting a rebound in prices. However, positive expectations for an oil production freeze are currently keeping the Loonie supported, as the Canadian currency managed to shrug off the recent buildup in US crude oil inventories.
Moving forward, there are no major event risks from both New Zealand and Canada today, leaving risk sentiment in play. The Chinese central bank’s RRR cut could continue to support the Kiwi but signs of progress in OPEC discussions could favor the Canadian dollar.
Canada’s Ivey PMI reading is due on Friday and analysts are expecting to see a dip from the previous 66.0 figure. Still, another increase could mean stronger gains for the Loonie and a test of NZDCAD support.