NZDUSD has slowly been trending higher, moving inside an ascending channel formation on its 4-hour chart. Price just bounced off the channel resistance at the .6950 minor psychological level and is due to test support at .6700-.6750 soon.
This support area is in line with the moving averages, which could hold as dynamic inflection points. The 100 SMA is above the longer-term 200 SMA, confirming that the uptrend could carry on.
Stochastic and RSI are both on the move down but these oscillators are nearing the oversold levels so a return in bullish momentum could be seen sooner or later. However, if sellers stay in control, a break of the .6700 support zone could be seen.
Earlier today, New Zealand reported a decline in its NZIER business confidence index from 15 to 2 and a fall in ANZ commodity prices. Later on, the GDT auction is scheduled and another sharp fall in dairy prices could mean more declines for the pair.
As for the dollar, it has been acting as a counter currency due to the lack of top-tier data. The US currency has failed to draw a lot of support from its upbeat NFP reading, indicating that traders are focusing on the lower odds of a Fed rate hike this quarter, as hinted in Fed head Yellen’s testimony.
The FOMC minutes are up for release later on in the week and more downbeat remarks could spur further declines for the US dollar. On the other hand, indications that the Fed is still considering hiking rates soon could renew demand.
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