- May 26, 2020
- Posted by: Analysis Team
- Category: FOREX, Technical Analysis
The New Zealand dollar rose in early trading as the market reacted to April trade data. According to Statistics Canada, the country’s trade surplus surged to a record of more than $1.3 billion. That happened as exports declined by 22% to $4 billion and as imports dropped by 33% to $119 million. The biggest gainers in imports were face masks and laptops. These numbers came at a time when New Zealand is opening its economy after “winning” the fight against coronavirus. It also came a day after a 5.8 magnitude earthquake hit the country.
The US dollar index was relatively unchanged as investors waited for the US consumer confidence and new home sales data. Analysts expect the consumer confidence to have slightly improved in May from 86.9 to 88.0. They also expect the new home sales to have dropped by 21.9% in April. That is because most people were staying indoors during the month. Just last week, data from the National Realtors Association showed that existing home sales dropped by almost 18% in April. The dollar will also react to a statement by FOMC member, Neel Kashkari.
The Japanese yen was little changed after the country declared victory over the coronavirus. In a statement yesterday, prime minister Abe said that the Japanese model had trounced the disease. He said this when he ended the state of emergency. The yen, which is often used as a safe-haven currency, is also reacting to the increasing tensions on trade. In the recent past, Donald Trump warned about China, which he blames for not providing enough warning on the disease. The decision by China to impose its security laws has also irked the United States. Brexit is another risk since the UK and the EU appear not to be making any progress.
The NZD/USD pair rose sharply after the mixed economic data and is now trading at 0.6125, which is higher than last week’s low of 0.6080. On the hourly chart, the price is above the 25-day and 50-day exponential moving average while the RSI has surged to almost 70. The pair will possibly continue rising as bulls attempt to test the previous high of 0.6156.
The EUR/USD pair was little changed at 1.0910 during the Asian session. On the four-hour chart, the price is between the 38.2% and 23.6% Fibonacci retracement level. It is also between the range of 1.0725 and 1.1017 where it has been since the beginning of April. Also, the price has moved slightly above the 50-day EMA while the Average True Range (ATR) has been on a downward trend. This means that the pair is just waiting for a catalyst before making a major breakout.
The USD/JPY pair is trading at 107.85, which is slightly above the 61.8% Fibonacci retracement level. It is also slightly above the 50-day and 100-day exponential moving average while the ATR is at its lowest level in months. As with the EUR/USD pair, the USD/JPY is trading within a narrow range where it has been since April. At this point, the pair may break out in either direction.