NZDUSD May Resistance Near Downtrend Line Prior to RBNZ Rate Decision

New Zealand – Official Cash Rate

On Wednesday, at GMT 10:00 p.m., the Reserve Bank of New Zealand will release the Official Cash Rate, which is the interest rate that banks in New Zealand use to lend funds held at the central bank.

Binary options traders consider the official cash rate to be the most important factor of the valuation of the New Zealand Dollar against other currencies. In fact, most of the other fundamental indicators are considered just to predict future interest rate.

Last month, the RBNZ left the official cash rate at 2.25% and the forecast for this month is that the rate would be reduced to 2.00% in order to boost the slowing New Zealand economy.

United States – Unemployment Claims

On Thursday, at GMT 1:30 p.m., the US Department of Labor will release the unemployment claims figure, which measures the changes in the number of people who claimed for unemployment insurance over the last week.

Binary options investors consider the unemployment claims data to be one of the most important fundamental indicators of the US job market. This is primarily because unemployment and consumer spending has direct correlation and an increasing number of unemployment claims indicate lower consumer spending in the economy, which makes up the bulk of the economic activity in the United States.

Last week, the US unemployment claims figure came out at 269,000 and the forecast for this week is currently set at a slightly higher figure, at 272,000.

Trade Recommendation for the NZDUSD

Trade Recommendation for the NZD/USD

Since the formation of a tiny pin bar on May 30, 2016, the NZD/USD price remained in a strong uptrend, which pushed the price by around 630 pips towards the resistance level around 0.7315. However, soon after reaching the resistance at 0.7315, the NZDUSD bulls lost the momentum and the pair started a retracement move towards the support level around 0.6950.

Over the last two weeks, the NZD/USD price has remained mostly range bound between the 0.6950 and 0.7315 levels, but managed to form a downtrend line as well.

Earlier today, the NZD/USD fell by 45 pips so far after forming a bearish outside bar (BEOB) on last Friday. However, by the end of the London session, the pair climbed back up, forming a potential bullish pin bar.

As the RBNZ is expected to lower its overnight cash rate to 2.00%, the fundamental outlook for the NZDUSD would likely remain bearish this week. However, if today’s price action forms the bullish pin bar, binary options traders should consider taking a bullish stance and as the price may move to retest the downtrend line before going further south.

Under the circumstances, it would be recommended that binary options traders consider placing a CALL order for the NZD/USD with their top binary options brokers as soon as the price and closes above the 0.7140 level, which is the next major resistance level.

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