NZDCAD is trending higher on its 1-hour chart, testing support at the ascending channel around the .9600 major psychological level. A bounce off this area could set off a move to the top of the channel at the .9700-.9750 area.
The 100 SMA is still above the longer-term 200 SMA, which confirms that the path of least resistance is to the upside. Also, the 200 SMA coincides with the bottom of the channel so the dynamic support could keep losses in check. The gap between the moving averages is widening slightly so bullish pressure might be strengthening.
Stochastic is on the move down, though, which means that sellers are in control of price action for now. This could trigger a break below support, possibly leading to a drop back below the .9500 mark and into the longer-term range. Meanwhile, RSI is starting to turn higher to show that buyers are trying to take the upper hand.
The RBNZ decided to keep interest rates on hold at 2.00% for the time being but cited that inflation has been weak. They reiterated that policy should remain accommodative and even noted that further easing could be required, keeping the door open for a rate cut in their next meeting.
As for the Canadian dollar, the main event risks aren’t due until Friday. These are the CPI and retail sales reports, which are expected to show small improvements. Stronger than expected data could set off a downside break for NZDCAD while weak readings could lead to a bounce.
Another possible catalyst is the OPEC gathering in Algiers, as some energy officials have previously mentioned that they’re open to the idea of an output freeze. However, other ministers have downplayed this possibility, keeping crude oil in limbo until an official announcement is made.
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