Reserve bank of New Zealand (RBNZ) Asst. Governor Mc Dermott hammered nail on kiwi bulls by raising the possibility of a rate cut over the next meetings.
- According to Mr. Mc Dermott, RBNZ is not considering any rate hikes, instead looking to the possibility of lowering rates, over weak economic activities.
These comments did the trick, kiwi turned into worst performer this week, as bulls got hammered at the falling trend line close to 0.772 against dollar, now trading at 0.76.
This made all kiwi based pairs extremely attractive. Euro is trading at 1.43 against Kiwi.
- Euro is up more than 400 points this week so far. Bulls have taken out previous week high.
- Return could be very high for the bulls, as they made a comeback from historic low of 1.4032.
- Euro has remained clogged with its own issues of falling yields and Greece dilemma, however Euro is posing a comeback and Kiwi is sure to lag.
- Next RBNZ rate decision is due next week, kiwi to drift with down bias at least till then.
It is too early to say that broader downtrend remains has reversed, nevertheless opportunities in the short term remains commendable. A testing of resistance around 1.452 area seems plausible.
Trades are advised to take position in breakout and buy support to keep the average enhanced, as some pull back would possibly be there after massive rally.
BE CAUTIOUS –
- As shown in chart Kiwi is very close to falling trend line, Shorting may not be ideal, instead bulls might rein as suggested above.
- Bulls on other hand should remain cautious over Euro’s development. It stands a speculative position over change in relative policy position as of now.
The material has been provided by InstaForex Company – www.instaforex.com