NZD/CAD Could Be Gearing Up For 300-Pip Slide
Matt Simpson | Jun 11, 2019 09:27
Near the end of April we flagged that NZD/CAD could be on the verge of a major breakdown . Recent price action remains constructive of that view.
Unsurprisingly, commodity currencies have felt the heat throughout the trade war. However, other factors have been at play to weigh on AUD, CAD and NZD with varying degrees, such as global growth concerns, weak domestic data and, therefore, expectations for central bank easing. However, once again recent developments have seen the pecking order change among the three, where CAD is now the strongest of the three and NZD is the weakest.
- Aussie selling was given a reprieve on reports that Australia had narrowly avoided Trump’s tariffs on metals, giving AUD a tailwind just before RBA cut rates to a record low.
- The US-Mexico deal announced over the weekend has provided support for CAD, as traders see a deal with a U.S. neighbour as ‘neighbourhood friendly.’ Of course, this can change in a flash but for now, CAD remains the strongest of the three commodity currencies.
- In the current environment, NZD/CAD appears to be the better short over AUD/CAD
-
Following its failed upside break of the 2016 trendline, momentum has remained predominantly bearish and its breakdown has confirmed a multi-month double top pattern. If successful, the pattern projects an approximate target around 0.8500.
- Prices have retraced towards (and respected) the original breakout level and produced a 2-bar reversal at the 38.2% Fibonacci level.
- Bearish momentum has now realigned with the dominant trend, following its most bearish session in 11 weeks yesterday.
- From here, we’d expect bears to fade into rallies and target the 0.8692 lows ahead of another break lower.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.