NZDUSD Tests Key Resistance Ahead of Yellen’s Speach

The New Zealand Dollar (NZD) inched higher against the US Dollar (USD) on Friday, increasing the price of NZDUSD to more than 0.7300 ahead of Federal Reserve’s chairwoman Jannet Yellen’s speech. The technical bias remains bullish because of a Higher High in the recent upside rally.

Technical Analysis

As of this writing, the pair is being traded near 0.7320. A hurdle can be noted around 0.7344-0.7350, the swing high of the recent upside rally as well as the psychological number. A break and daily closing above the 0.7350 resistance area could incite the renewed buying interest, validating a move towards the 0.7500 resistance.

On the downside, the pair is likely to find a support around 0.7286, the intraday low of yesterday ahead of 0.7100, the confluence of a horizontal resistance as well as the psychological number. The technical bias will remain bullish as long as the 0.7086 support area is intact which is the swing low of the recent downside move.

Yellen Speech

For financial markets, it’s the most keenly anticipated speech of the summer. On Friday, Federal Reserve chair Janet Yellen will address the annual gathering of central bankers in Jackson Hole, Wyoming on the subject of “The Federal Reserve’s Monetary Policy Toolkit.” Although Ms. Yellen’s address may prove a wide-ranging speech on what is in the central bank’s arsenal, traders and investors will scrutinize it for any hints about when policymakers are inclined to raise interest rates. What might make investors’ reception of the speech particularly interesting is that they remain skeptical the Fed will move next month (see the second chart) and that markets have been especially calm this month.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around the current levels still appears to be a good strategy in short to medium term if we get a valid bearish reversal candle on the daily chart.

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