NZDCAD is giving trading signals that it is ready to resume its impulse wave in the direction of the uptrend. The rising trend line connecting the lows of the price is still intact and appears to have held as support on the latest test.
A rally could last until the pair’s previous highs around the .9600 major psychological resistance level. Stronger buying momentum could even push the pair to new highs, depending on how this week’s set of economic events turn out.
Trading Signals and Forecasts
Bear in mind that the RBNZ is set to make its interest rate statement this week and possibly announce another interest rate hike. If so, this could drive the New Zealand dollar much higher against its forex counterparts as traders would take this as trading signals to take advantage of the positive interest rate differentials.
However, a disappointing announcement from the RBNZ might lead to massive Kiwi selling, which might lead to a break of the rising trend line. This could see NZDCAD down to the next support area at the .9000 major psychological level.
In terms of economic data though, the New Zealand economy seems to be doing far better than the Canadian economy. Apart from the latest decline in dairy exports and milk prices, New Zealand has printed stronger than expected jobs data and consumer spending figures while Canada’s set of figures have disappointed.
The bias for this NZDCAD pair is still to the upside, pending confirmation and further trading signals that the rally could carry on. Going long at the current levels with a wide stop below the trend line and a target at the .9600 level or higher could yield a good return on risk for a long-term trade. A rate cut from the RBNZ this week would be an additional reason to add to positions as the rally carries on.
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