Chart of the Day NZDUSD

NZDUSD Potential Reversal Zone - Probable Price Path

NZD: Kiwi has been well bid on the back of the ongoing demand for global equities. We've also seen the market somewhat supported after an improvement to Kiwi retail credit card spending, New Zealand retail card spending rebounded in Sep, New Zealand retail card spending rose 5.4% MOM in September (Aug: -8.9%), following previous month’s decline, offering some positive news that consumer spending is still recovering. Looking ahead, US inflation data is the only notable standout. According to CFTC data, as of last Tuesday, the net long positions of New Zealand dollars held by institutional investors more than doubled weekly to nearly 4,300; the net short positions of New Zealand dollars held by leveraged funds increased by about 500 to nearly 1,900.

USD: Power on. US stocks climbed to near six-week highs, led by tech stocks, ahead of the US 3Q earnings season. The S&P 500 rose for a fourth session by 1.6% while VIX also edged slightly higher to 25.07 overnight. The UST bond market was closed for a holiday while the USD traded mixed as Congress continued to bicker over the US fiscal stimulus plan. Market players appear to have flipped to thinking that a Democrat blue sweep for the US election is not such a bad thing as fiscal stimulus is likely to finally get done. Meanwhile, China has suspended purchases of Australian coal amid souring relations.

From a technical and trading perspective, the NZDUSD has continued to demonstrate resilience after a successful test and hold of the daily and monthly pivots, further support comes from price continuing to trade above the near term volume weighted price as this bullish consolidation persists, bull should be rewarded on a breach of .6675, the immediate upside hurdle comes in at .6700 the equality objective from the early October swing low,this level could also represent the right shoulder of potential head and shoulders pattern. Bulls will look for a closing breach of .6710 to encourage further upside expansion to test offers and stops at the prior cycle highs .6800. On the day only a closing breach of the weekly pivot at .6620 would concern the bullish thesis.

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