Buyers still need a strong reason to establish a bullish momentum/bias
It’s a quiet day so far with market participants all awaiting the Trump-Xi summit. This isn’t the time to go hunting for “invisible” trades. In times like these, patience is a virtue in trading. Ahead of the meeting, NZD/USD is setting up to be one of the major pairs to watch out for upon the conclusion.
The Trump-Xi summit will impact risk sentiment in markets more than anything else and that will have an indirect impact on the kiwi as well. If the outcome and the mood is bullish after the meeting, a break above the 200-day MA (blue line) for NZD/USD buyers will see the pair take flight towards the upside once more as short covering will continue to be the name of the game. Squeezes will carry on in such a event with the next resistance level seen around 0.6910 from the 50.0 retracement level before the 0.7000 psychological barrier comes into play.
However, if the mood is sour and there is no trade progress, sellers can’t ask for a better ‘line in the sand’ to map out risk associated to a return of a downside move in the pair. Buyers and sellers are just playing out a tug of war battle around the 200-day MA now. It’ll depend on the Trump-Xi summit to decide which side has to let go of the rope come Monday.