The NZD/USD is trading near short term lows in the wake of the Reserve Bank of New Zealand delivering an expected interest rate hike.

The NZD/USD stumbled lower in the past two days as the Reserve Bank of New Zealand was expected to raise their interest rate by another 0.50% earlier this morning.  Intriguingly while the NZD/USD currency pair is trading within sight of short term lower values, the technical trend has actually incrementally ticked upwards the past twelve hours. The upwards movement started to occur before the central bank actually raised their borrowing costs.

The interest rate hike from New Zealand’s central bank was widely anticipated and now that result is official, it appears the NZD/USD can be expected to potentially retrace higher ratios it has recently seen which were higher. On the 12^th of August the NZD/USD was trading near the 0.64650 mark, this before it started to tumble as the weekend began. Yesterday saw a low of approximately 0.63180. Early morning volatility was certainly on display earlier today, but the fireworks may become less pervasive in the coming hours.

The NZD/USD is Straddling Important Higher Support Levels via a One Month Chart

While the lower move the past couple of days may have made bullish speculators nervous, the ability of the NZD/USD to find support near the 0.63200 level could prove important.  Yes, there will be reversals lower, which a natural part of the trading day, but if current support ratios prove durable this could spark the speculative notion the NZD/USD remains oversold.

• If the NZD/USD is able to hold the 0.63450 to 0.63350 vicinity as durable support, more buying of the Forex pair could emerge.
• Traders cannot be blamed for targeting the 0.63750 to 0.63850 level as short term upwards goals if they choose to be buyers.

Upward Trend of the NZD/USD could prove Attractive to Speculative Bulls

The NZD/USD was near the 0.62100 level on the 5^th of August, which was a depth tested since the 29^th of July and proved rather consistent as support. Since the 5^th of August the NZD/USD has incrementally been able to gain and raise its technical support levels. This morning’s continued climb from lows seen yesterday may signal additional bullish behavior is favored by financial houses as they consider the outlook of the Reserve Bank of New Zealand as it proves to be hawkish.

Traders should remain realistic regarding their speculative ambitions. The NZD/USD is able to become volatile and moves downward will certainly occur, but wagers on upside price action based on the belief that support is beginning to look technically stronger could spark more pursuit of perceived resistance which appears vulnerable and within grasp. Traders looking for additional upside momentum in the near term cannot be blamed.

NZD/USD Short-Term Outlook

Current Resistance: 0.63780

Current Support: 0.63330

High Target: 0.64120

Low Target: 0.63075

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Today’s recommendation on the lira against the dollar

Risk 0.50%.

None of the buy or sell trades of the recommendation were activated yesterday

Best selling entry points

• Entering a short position with a pending order from 16.40 levels
• Set a stop loss point to close the lowest support levels 16.66.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the strong resistance levels at 16.00.

Best entry points buy

• Entering a long position with a pending order from 15.99 levels
• The best points for setting stop-loss are closing the highest levels of 15.78.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the support levels 16.60

The Turkish lira continued its losses to become the worst performing currency during the current year. Investors are awaiting the Turkish Central Bank’s decision on interest rates today. No changes are expected to the monetary policy of the bank, which is under the effective control of Turkish President Recep Tayyip Erdogan. The bank has fixed the interest rate since last September, following a series of interest rate cuts that continued over several months. The Turkish Central Bank is going against the assumption of raising the interest rate to control the high inflation rate. During bad economic data that the country is suffering from, the lira is not expected to witness any improvement against the dollar, especially with the decline in the actual monetary reserves of foreign currencies owned by the Central Bank of Turkey.

On the technical front, the Turkish lira fell slightly against the dollar during today’s trading, as the lira reached the main resistance levels recorded at the end of last year’s trading. The pair also rose above the moving averages 50, 100 and 200, respectively, on the four-hour time frame as well as on the 60-minute time frame. The pair is trading the highest support levels that are concentrated at 16.00 and 15.85 levels, respectively. On the other hand, the lira is trading below the resistance levels at 17.11 and 18.39. We expect the lira to continue to decline, especially if the pair closed above the 16.40 resistance levels. Please adhere to the numbers in the recommendation with the need to maintain capital management.

This week, it will be unusual in the reaction to the price of the GBP/USD currency pair, as the currency pair will await the announcement of interest decisions from both the Bank of England and the US Federal Reserve.

The sharper tone towards more rate hikes will benefit one of the currencies. Amid the recent strength of the US dollar with expectations of raising US interest rates, the sterling dollar currency pair fell towards the 1.2411 support level, its lowest since July 2020, and it may start trading this important week, stable around the 1.2580 level.

At the end of last week’s trading, the currency pair tried to rise as the British pound is looking to recoup some of this week’s losses of 2.5 percent against the rise of the US dollar. All in all, the US dollar had a particularly strong month and yielded good returns for traders who were betting on one of the strongest trends in the global financial markets.

There are no headlines or key terms to explain the dollar’s decline ahead of the weekend, but purely technically it was bound to happen at some point: the GBP/USD and other dollar pairs are in oversold territory now. A look at the daily chart of the GBP/USD pair shows that the Relative Strength Index (RSI) has dropped significantly below the oversold water mark at 30. This does not represent a trend reversal. The Relative Strength Index (RSI), an indicator that can give clues to the momentum of a financial market while also indicating when the market is oversold or overbought. Anything less than 30 is oversold, and the above shows that the GBP-Dollar did not reach such oversold conditions during 2022. When it was last oversold in March, there was a further rally, but it did not represent a turn in trend .

The last time sterling reached more oversold states was back in 2020 when markets were in complete panic regarding the spread of the Covid-19 virus. A correction in the RSI will be inevitable: this could mean a higher recovery or simply a pause in the downward movement and some of the following days of bearish movement.

This does not necessarily mark the end of a downtrend that has been in place for nearly a year now.

JP Morgan’s forex analysts this week lowered their forecast for the pound-dollar exchange rate, largely as an admission that the dollar’s continued rally should continue further. “The system of weak growth expectations and high inflation has persisted and continues to support the strength of the US dollar,” says Mira Chandan, FX strategist at JP Morgan.

As a result, the investment bank raised its dollar forecast by an average of 1.5% over its forecast horizon. JP Morgan’s outlook for a strong dollar is dependent on the exceptional economic performance of the United States relative to the rest of the world, and the associated responsive rise in interest rates at the US Federal Reserve. Accordingly, Chandan says, “The backdrop for global growth and inflation remains fragile and supports the strength of the dollar.”

Chandan notes that global growth forecasts have been lowered in the past six weeks and inflation expectations have increased. “We are making major revisions to the outlook for the major US dollar pairs this month,” the analyst adds. This includes: EUR/USD As forecasts for the third quarter of 2022 have been lowered to 1.05 from 1.11 and the 2023 quarter has been reduced to 1.10 from 1.13. The bank’s forecast for GBP/USD for the third quarter of 2022 was lowered to 1.27 from 1.33 and the first quarter of 2023 fell to 1.31 from 1.34 previously.

Accordingly, analysts say the downgrade to Euro and Pound forecasts partly reflects the growing evidence of stagflation in the Eurozone and UK economies.

According to the pair’s technical analysis: GBP/USD may finally be ready to reverse its slide, as the price finds support at the 1.2400 area. The correction may lead to a rise in the Fibonacci retracement levels or the previous triangle support around 1.3000. The 38.2% Fibonacci level at 1.2680, then the 50% level at 1.2764. The biggest retracement could be 61.8% Fibonacci near the minor psychological mark of 1.2850 or the bottom of the broken triangle near the dynamic reversal points of the moving averages.

The 100 SMA is below the 200 SMA to indicate that the general trend is still down, and the selling is more likely to resume than reverse. The gap between the indicators is slowly widening to reflect increased selling pressure. Stochastic is rising above from an oversold area to indicate that buyers are taking over while tired sellers are taking a breather. Likewise, the RSI is moving upwards, so the price can follow suit as upward pressure increases and be able to enjoy both Oscillators with plenty of room to go up before reversing overbought conditions.

Despite three consecutive trading sessions, during which the price of the USD/JPY was subjected to sell-offs, it moved towards the support level 126.92 and settled around 127.20 at the time of writing the analysis. The selling came after the currency pair gained towards the 129.40 resistance level, the highest for the currency pair in 20 years. The recent performance so far, the USD/JPY pair has not come out of its upward trend, which is still supported by strong expectations for the future of raising US interest rates during the year 2022 to face the fiercest global inflation waves caused by the epidemic and recently the Russian / Ukrainian war.

Despite expectations of a US interest rate hike. US 10-year Treasury yields are close to 3% — a level not seen since late 2018. But short-term yields are rising faster with the two-year US yield gaining 33 basis points over the past week compared to the 10-year increase of 18 basis points. And all of this because market rates are raised by 50 basis points by the Federal Reserve at every meeting in 2022.

These moves have flattened the 2-year 10-year bond curve in the US, with the result that our recession model once again sets a 50% chance of a recession in the next 12 months. Accordingly, it seems that the stocks have noticed a noticeable weakness.

Meanwhile, the Fed’s recession model, which uses the 3m10y portion of the yield curve, continues to give only a 2% probability of a recession. Macro Hive has presented two models for predicting a US recession using the slope of the yield curve. When the long-term returns begin to fall towards or below the short-term returns, the curve flattens or reverses.

This often predicted a recession in subsequent months.

One of the models from the Fed is based on the 3m 10h curve and the second is our modified version based on the 2x10h curve. The two years could better reflect expectations for Fed increases in the coming years.

On the economic side: US consumer confidence slipped slightly in April but remains elevated even as inflation continues to cloud their optimism for the rest of the year. Accordingly, the Conference Board said yesterday that the US Consumer Confidence Index – which takes into account consumers’ assessment of current conditions and their expectations for the future – fell to 107.3 in April, from 107.6 in March. The Business Research Group’s Current Situation Index, which measures consumers’ assessment of current business and business conditions, also fell modestly this month to 152.6 from 153.8 in March.

The expectations index, which is based on consumers’ six-month expectations for income, business and the labor market, rose to a reading of 77.2 in April from a reading of 76.7 in March. It settled at 80.8 in February and remains a weak spot in the survey. Commenting on the performance, Lynn Franco, senior director of economic indicators at the Conference Board, said: “Buy intentions have generally fallen from recent levels as interest rates started to rise.” Meanwhile, concerns about inflation eased from an all-time high in March but remained elevated.

Franco added that inflation and the war in Ukraine will continue to erode confidence and may further reduce consumer spending this year.

Despite the recent sell-offs, the general trend of the USD/JPY currency pair is still bullish, and there will be no break out of the descending channel below without the currency pair moving towards the support levels 125.00 and 122.20. On the other hand, the resistance 128.20 will remain important to reach the psychological peak 130.00.

The discrepancy in the economic performance and the future of raising interest rates from global central banks will remain factors that support the upward trend of the currency pair.

Today, the USD/JPY pair will be affected by risk sentiment.

Today’s recommendation on the lira against the dollar

– Risk 0.50%.

– The purchase order on Tuesday has been activated and the deal is still being traded

– None of the buy or sell transactions of yesterday were activated

Best buy entry points

Entering a buy position with a direct order from 14.62 . levels

– Set a stop loss point to close the lowest support levels 14.36.

– Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.

Close half of the contracts with a profit equal to 75 pips and leave the rest of the contracts until the strong resistance levels at 14.85.

Best selling entry points

Entering a short position with a pending order from 14.86 . levels

– The best points for setting the stop loss are closing the highest levels of 14.98.

– Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.

Close half of the contracts with a profit equal to 75 pips and leave the rest of the contracts until the support levels 14.40

The lira fell during early trading today, Thursday. Where investors followed a report issued by Bloomberg Agency, which includes some analysts’ opinions, the report mentioned expectations of fixing the interest rate by the Turkish Central Bank during the next meeting. Despite the emphasis that most of the central banks in the world follow in raising interest rates to control high inflation rates. The report also stated that expectations focus on the possibility of the lira recording more decline during the current month, despite the stability it has witnessed since nearly a month. Their foreign earnings into the lira.

On the technical front, the Turkish lira declined against the dollar during today’s trading, as the pair reached the bottom recorded at the end of last month, which represents strong support levels, as the pair rose from it. In general, the US dollar against the dollar continued to trade within a narrow trading range. The pair is currently trading below the descending trend line on the 240-minute time frame, shown on the chart. The pair also varied around the 50, 100 and 200 moving averages, respectively, on the four-hour time frame, while the pair fell above those averages on the 60-minute time frame. The pair is trading the highest support levels that are concentrated at 14.50 and 14.25 levels, respectively. On the other hand, the lira is trading below the resistance levels at 14.76 and 14.85, respectively. We expect the lira to fluctuate within the current range without major changes. Please adhere to the numbers in the recommendation with the need to maintain capital management.

The US Federal Reserve confirmed that it is ready to raise US interest rates strongly during the year, and thus the strength of the US dollar increased against the rest of the other major currencies. In the case of the EUR/USD currency pair, it moved in its descending path, reaching the support level 1.0875, where it is stable near at the time of writing the analysis. The most popular currency pair in the Forex market is the closest to breaching the psychological support 1.0800. As I mentioned before, the divergence in economic performance and the future of monetary policy tightening by central banks will remain in favor of the US dollar.

The results of the recent economic data confirm this. The economy of the Eurozone is suffering strongly from the effects of the Russian-Ukrainian war, which has entered its second month, and there are no strong signs on the ground that it is nearing an end, adding to the euro’s suffering. Within the series of weak data, data from statistics agency Destatis revealed that German factory orders fell for the first time in four months in February, driven largely by lower foreign demand. According to the figures, German factory orders fell by -2.2 percent on a monthly basis in February, in contrast to an increase of 2.3 percent in January. Economists had expected a slight decrease of 0.2 percent. This was the first drop since October 2021.

Meanwhile, annual growth in total new orders fell sharply to 2.9% from 8.2% in January.

New orders from foreign countries fell 3.3 percent from January. Within this foreign demand, orders from the eurozone fell by 3.3 percent and orders from economies outside the eurozone fell by 3.4 percent. Meanwhile, domestic orders posted a monthly decrease of 0.2 percent. The data showed that producers of capital goods recorded a decrease of 2.8 percent. Intermediate goods producers saw a 1.9 percent drop in new orders. On the consumer goods front, orders rose 0.7 percent. Moreover, the data showed that domestic trading volume fell 1.4 percent in February, reversing a revised 1.6 percent increase in January. For its part, the German Economy Ministry said that the outlook for factory orders is currently muted due to the uncertainty caused by the war in Ukraine.

Elsewhere, a survey of German construction purchasing managers showed that the sector recorded a sharp slowdown in activity growth in March as the Ukraine war dented demand and prices as well as supply. Accordingly, the S&P Global Construction Purchasing Managers’ Index fell to 50.9 in March from a two-year high of 54.9 in February. A score above the 50.0 level indicates growth in this sector.

On the daily chart, the general trend of the EUR/USD currency pair is still bearish, and it crossed the 1.0800 psychological support, which deepens the bears’ control over the performance, thus preparing for lower levels. On the other hand, and over the same period of time, the breach of the 1.1200 resistance will be crucial to change the general outlook initially, but so far the EUR/USD gains will remain subject to sale as long as the Russian war continues. Investors do not care about technical indicators reaching oversold levels as much as they monitor and react to developments in the war and their negative impact on the European economy.

I believe that waiting for signs of exhaustion will continue to be the way going forward, as we are still very much in a downtrend.

The NASDAQ 100 has rallied significantly during the trading session on Wednesday, despite the fact that the Federal Reserve raised interest rates by 25 basis points. Regardless, there are a lot of concerns out there although we are probably due for some type of recovery rally. You could even make an argument for a bit of a falling wedge, which is a bullish sign, but we have not broken through the potential downtrend in order to make that happen.

Even if we do rally at this point, I think it is probably only a matter of time before we see sellers, which could open up the possibility of yet another shorting opportunity. I am not willing to short it quite yet, but I do recognize that the 14,000 level might be a bit too much to deal with. The Federal Reserve is more likely than not to continue raising rates, so the market will have to come to grips with that. The biggest problem I see with this index is the fact that the NASDAQ 100 is full of high-growth stocks, which need high growth to remain bullish.

This does not suggest that we cannot rally, just that it is very unlikely that we are simply going to continue straight up in the air. I believe that waiting for signs of exhaustion will continue to be the way going forward, as we are still very much in a downtrend. I believe that the 14,000 level is a major barrier, followed by the 14,300 level. Because of this, I am going to sit on the sidelines and let the bounce happen because to think that we are done selling off is probably a bit much at this point.

The 13,000 level underneath has been a hard barrier to break, so a bounce and signs of exhaustion could be a sign that the 13,000 level would be a target again. The 50 Day EMA is currently at the 14,400 level and sloping lower, so therefore I think there is plenty of dynamic resistance above. Whether or not this rally last couple of days is a completely different question, but right now I think just simply letting the market do its thing and then take advantage of a continuation of the overall trend.