Global employment updates, easing tensions in the Middle East, and the Federal Reserve's latest statement were some of the biggest drivers this week, leading our strategists to focus primarily on the US dollar and the US Dollar.
Out of six discussions, Only two scenario/price forecasts saw both financial and technical arguments raised To become a potential candidate for a risk management overlay. Check out our review of that discussion to find out what happened!
Watchlists are price predictions and strategy discussions supported by fundamental and technical analysis, and are a crucial step towards creating an account High quality discretionary business idea Before working on a risk management and trading plan.
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On Tuesday, our strategists focused on potential volatility from New Zealand's upcoming employment update, and in this particular scenario, we thought that if New Zealand net payrolls came out weaker than expected, it could help push the upside in the AUD/NZD higher.
Our strategy was to see if the Fibonacci zone would be tested and hold after that specific fundamental result, and if so, technical buyers might jump on the trend from there.
This scenario has already played out as New Zealand reported a net job loss in the first quarter of 2024 and a rise in the unemployment rate; We've also seen labor costs come down as well. Overall, this was a fundamental catalyst that supported our long-term AUD/NZD bias.
The AUD/NZD pair was spot on in the event, but there were a couple of pullbacks to the 38% Fibonacci retracement zone (not the 50% to 61% entry target zone) which served as technical opportunities to play the upside at better prices.
For those who put a long risk management plan there and took profits around the target zone (around the previous swing high at 1.1014), it is very likely that they saw a net positive result in this discussion.
On Wednesday, our strategists saw the NZD/USD pair testing a key support area, and with the FOMC monetary policy statement approaching, we thought that if there was not a strong hawkish tone from Fed Chairman Powell and his gang, the support area could Wait and draw a strong bearish reaction for the US dollar.
Later in the day, the Federal Open Market Committee kept interest rates as expected in its latest statement, looking for greater confidence that inflation is moving sustainably toward the target before cutting interest rates.
The biggest driver for the US dollar and bond yields was Powell's comments indicating that a rate hike was unlikely, disappointing traders who may have thought the recent inflation readings from the US could have opened up the possibility of higher interest rates.
Our basic qualifier was triggered, and as the NZD/USD pair immediately rebounded from the support zone, the technical qualifier was activated as well.
From the news feed, the NZD/USD pair continued to move 110 pips higher over the rest of the week, eventually helped by a weaker-than-expected US employment update. For those who hedged long risk positions immediately after the event and held them for the rest of the week, it was very likely that they saw a net positive result.
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