NZDUSD is trending higher but a countertrend opportunity is presenting itself now that the pair is testing the rising channel resistance.

The top of the range at .6800 appears to have held as a ceiling, with a short-term double top pattern, and might put price on track towards testing the channel support at .6600.

RSI is on the move down so there’s bearish pressure present. Stochastic is also heading lower but is already near the oversold region so a bounce might take place soon. In addition, the 100 SMA is above the 200 SMA so the path of least resistance is to the upside. These moving averages are near the bottom of the channel, which might continue to hold as support. 

Risk appetite has weakened in the financial markets, weighing on higher-yielding commodity currencies such as the New Zealand dollar. Reports of another buildup in crude oil stockpiles have been bearish for the comdolls, to the advantage of the safe-haven dollar. 

Traders appear to be pricing in expectations for the upcoming RBNZ interest rate decision, as a rate cut might be announced. In their previous rate statement, RBNZ head Wheeler mentioned that they’re keeping the door open for further easing and the latest set of reports from New Zealand might warrant more stimulus. 

In particular, the GDT auctions have yielded mostly declines in prices since the beginning of the year, leading Fonterra to downgrade milk payout forecasts to farmers. Dovish remarks or actual easing action could mean more losses for NZDUSD or perhaps even a break below the channel support for a longer-term selloff. 

By Kate Curtis from Trader’s Way