In North America today, there are no economic releases of note, so markets will most likely be range bound unless something new and unexpected hits the wires. The hostilities in Ukraine have remained strained with pro-Russian forces asserting themselves in Crimea over the weekend even as world leaders have condemned their actions and Russia’s backing of them. However, unless shots are fired, markets may only give this a passing glance and look toward events that are occurring later in the week instead.
Speaking of later in the week, the Reserve Bank of New Zealand will be making a monetary policy decision on Wednesday afternoon North American time at which they are widely expected to raise interest rates by a quarter percent. Over the last two and a half weeks, the NZD/USD has risen on that expectation as it rallied over 250 pips from around 0.8250 to slightly above 0.85 while following a clean trend line to those highs. However, that trend line is now being challenged this morning on a strong retracement and it could serve as a vital decision point for the currency pair to potentially maintain its current strength or attempt to wash out some longs that are a little late to the game.
If it can bounce from here, the potential to retake 0.85 could be in the cards as pre-positioning for the RBNZ takes shape. On the other side of the equation, if a stop run takes place, support could be found near previous support around 0.8420 and the psychologically significant 0.84 level thereafter.
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