NZD/USD: Bulls take back charge, eyeing a run to the 38.2% Fibo
- NZD/USD rallied on Friday while above the pivot, extending the recovery from the 0.6480s and in the correction of the early December 0.6969 high.
- In early Asia, NZD/USD was initially bid on the open, currently trading at 0.6738, hitting a high of 0.6752, up from a low of 0.6737 and sent back to the start again.
NZD/USD has been in a correction since reaching a low of 0.6652 at the start of this year to what proceeded a volatile end to 2018 across the financial and commodity markets. December did see the bird cross the 50% rectracement Fibo of the 2018 downtrend up at 0.6929, (0.6969 was the early Dec high).
Outlook for the antipodeans is blurred and complex
However, the outlook for the antipodeans is blurred and complex. The pair can only recover if Sino/US relations improve and a trade deal is arranged between Beijing and Washington, despite a mixed outlook for the US economy and prospects of the downturn that could ultimately weigh on the dollar. However, the Kiwi will require a general lift in positive sentiment for a global recovery, and that will require a trade deal. On Friday, US markets walked into such sentiment which triggered a sharp improvement in risk. Both Washington and Beijing announced that they would hold vice-ministerial level negotiations over trade in the Chinese capital early next week which will mark the first face-to-face meeting since Donald Trump and Xi Jinping met at the G-20 meeting in December and agreed to a temporary truce on tariffs.
Bulls have taken back the 23.6% Fibo at 0.6663 and eye a test of the 21-D SMA guarding R2 located at 0.6800. R3 is located at 0.6849 which will take out the 38.2% Fibo of 0.6810. The 50% Fibo is located at 0.6929 guarding the Dec high of 0.6969. On the downside, a break of the 100-D SMA at 0.6679 with daily closes will sure up the negative bias again.