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Hugo in HTO Trading,

NZDUSD: Trapped between the 10 and 50 day moving averages

Investors are reluctant to make big stakes ahead of today’s Yellen’s testimony on the US economy and monetary policy before the senate banking committee, which will be closely watched for any indications on the timing of an interest rate hike.

On today’s economic calendar we have from New Zealand the inflation expectations with a previous number of 2.1%, analysts are expecting a decline from the previous report, on the other hand an increase in expectations is regarded as inflationary which may anticipate a rise in interest rates. In the US we have the consumer confidence in February that is estimated to drop from 102.9 to 99.6 and Yellen’s testimony.

Yesterday the NZDUSD initially fell but found enough buying pressure at 0.7500 the 10-day moving average to turn around and closed near the open of the day. The pair remains in a bearish phase and rose 3.73% since the start of the month. The pair is being squeezed between the 50-day and the 10-day moving average and retraced already 50% of the downward move made in January.

Expecting downward move to a Fibonacci level at 0.7374 on a break below a Fibonacci level at 0.7472 (scenario 1) or a break above a Fibonacci level at 0.7552 could push the pair up to another Fibonacci level at 0.7631 (scenario 2).