Market Spotlight: NZDCAD Reversal Opportunities

32895 market spotlight nzdcad reversal opportunities

Looking To BreakoutThe New Zealand Dollar has been one of the best performers this week as a hawkish shift in RBNZ expectations is helping support NZD. Given the heavily bearish sentiment we’d seen up until the last week, there is plenty of position covering going on which is helping drive NZD higher here.One chart which is catching my eye in particular is NZDCAD. With CAD on the backfoot amidst the correction lower in oil prices, NZDCAD looks to have carved out a higher low within the longer-term bearish trend, suggesting room for a broader correction higher. Price is fast approaching the bearish trend line from YTD highs along with the .8553 level. Look for a break here targeting .8631 initially and .8751 thereafter. Retail market is around 60% short here, suggesting plenty of room for a fuller move to develop as shorts pile up.Keep An Eye OnOil prices and USD flows will be key across the rest of today and into next week. The key focus will then be the RBNZ meeting overnight on Tuesday/Wednesday. The market is looking for the RBNZ to raise rates along with an upward revision to its forecasts and outlooks, which should keep NZD supported near term. Given that the rate hike is well priced in, the bigger focus will be on forward guidance where NZD bulls will need to see a more hawkish stance from the RBNZ.

Source: Tickmill

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