With a slow start off to this week, the USD is slowing down after taking over the trading market on Friday.
Later this week the RBNZ (Reserve Bank of New Zealand) will be holding a monetary policy meeting, leaving the New Zealand Dollar (NZD) a little more vulnerable than usual. Starting the week on the back of the global solid momentum of the USD, yesterday the NZD received some negative feedback from the PM Key – making the outcome of the currency bleak for the remainder of the week. The PM mentioned that the RBNZ will need to implement different strategies in order to ensure there is a big need for a tighter monetary policy. There is an excess of allowance given to the housing market and this is causing over inflation in the country. Hence the meeting in order to slow the issue down somewhat.
This Friday will bring with it the Canadian jobs report for February, which will have a sure influence on the Canadian Dollar (CAD). With the strong USD slowing in confidence post-NFP, I predict a breakthrough for the pair USD / CAD by Friday after the economic data is released. This is one pair that could easily use a surge of volatility. For over 5 weeks now the pair has been experiencing higher lows and lower highs, bringing this to what economists call a ‘Symmetrical Triangle Pattern’. This analogy is compared to a coiled spring, whereas the range continues to build up in the spring then due to the built up pressure, the spring will release in a particular direction. It is often difficult to predict the outcome of a Symmetrical Triangle Pattern however at this point the implementation of technical oscillators can often confirm this breakthrough. This assumption looks more like a bullish peak will take place later this week.
Subsequent to last week’s backlash on the EUR / USD it appears that the pair has encountered a more stable footing in this week’s market. Furthermore, in support of the euro (EUR) is the Eurozone Sentix Investor Confidence index which has forecast on the above average in comparison to February. Having said that in my opinion I still see a trail of a bearish trend for the pair as there is still a massive void that is occurring between the strengthening USD and the divergence between the monetary policies of the Eurozone. Making its move finally the Eurozone has decided to start is QE as well as the cycle of the US rate hike will commence in June. In short this does not look good for the EUR in the near future.
Today’s Trading Tip:
My take on the EUR / USD is that in a more long-term trade it is wise to PUT on this pair. There is still no sufficient information that is going to bring this pair into the bullish patterns for this week anyway. Another one of my suspicions is that you can CALL on the USD / NZD I feel that the RBNZ is not going to come back with positive reports for the NZD this week.
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