The dollar story continued to dominate trading in Europe at midday as the US currency continued to tank. The best performing G10 currency was NZD, which had been the worst performing one when we walked in in the morning – no news is out, it’s just catching up to the rest of them. AUD was next; clearly nobody cares that Gov. Stevens said again that he’d prefer the AUD to be lower, especially after he said that the currency’s direction is “not entirely surprising” given the change in the outlook for the Fed and the “more positive data from China.” The CHF is lagging today after its outsized gains yesterday, but it’s still higher vs USD.
It looks to me like this weakness in the dollar could continue on Monday too as the US indicator due out -- existing home sales for September -- is expected to be lower. The health of the housing market is probably a big concern for the Fed and so this might feed into their concern about “tightening financial conditions” that delayed the tightening move in September. Then comes Tuesday and the non-farm payrolls, as well as who knows what else, and we will be back to a data-driven market.
The NZD/USD has been moving in a short-term uptrend since Oct. 10th. During the European morning the pair moved higher after hitting the strong support at 0.8446 (S2), which coincides with the 50-hour moving average (reliable support during the trend) and the blue uptrend line. Currently the pair is trading above the 0.8482 (S1) support barrier and is heading towards the 0.8520 (R1) ceiling. A violation of that hurdle would find the rate lying in territories not seen since May. The MACD oscillator favors further acceleration since it just poked its nose above its trigger line. On the daily chart, a triple bottom reversal formation (completed) is identified favoring the continuation of the trend.
Support: 0.8482 (S1), 0.8446 (S2), 0.8406 (S3)
Resistance: 0.8520 (R1), 0.8557 (R2), 0.8588 (R3)NZD/USD Hour Chart" title="NZD/USD Hour Chart" width="1731" height="808" src="https://d1-invdn-com.akamaized.net/content/pic20ebfe102b67ba6fbc5e7438416c78f9.png">
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