The NZDUSD pair has lost its recent gains and is trading near 0.5680 on Monday as market sentiment turns cautious. This pressure comes from reports that former US President Trump’s advisers are pushing for 25% tariffs on Mexico and Canada starting February 1, with no plans for negotiations. Meanwhile, tensions with Colombia eased after the country agreed to US terms regarding deportation flights.
The US Dollar Index (DXY) has recovered from its monthly low and is trading near 107.70, adding to the Kiwi’s struggles. Additionally, weaker-than-expected Chinese manufacturing data and the limited impact of China’s new economic stimulus measures have further weighed on the New Zealand Dollar, given New Zealand’s reliance on trade with China.
NZDCAD – D1 Timeframe
Crossing the 100-day moving average below the 200-day moving average is the initial factor leaning towards a bearish sentiment. In addition to that, however, we see the trendline resistance aligning well within the range of the rally-base-drop supply zone highlighted on the daily timeframe chart of NZDCAD. Since the price has already mitigated the Fair Value Gap (FVG) area, retesting the supply zone would be necessary to complete the puzzle.
NZDCAD – H4 Timeframe
On the 4-hour timeframe chart, we discover that there are two resistance trendlines – not just one – and both intersect right within the region of the supply zone. The multiple bearish breaks of structure and the price’s expected reaction from the supply zone would confirm a bearish entry.
Analyst’s Expectations:
- Direction: Bearish
- Target: 0.80706
- Invalidation: 0.82582
