Facts:
- NZDCAD is experiencing a bullish rebound from the November low around 0.8145.
- Both the recent resistance near 0.8256 and the short-term EMA have been broken.
- The RSI remains in an upward trend, still leaving room for further gains.
Recommendation:
- Trade: Long position on NZDCAD at market price
- Take Profit: 0.8400
- Stop Loss: 0.8210
Commentary:
NZDCAD has entered a bullish momentum this week, pushing the pair towards the upper boundaries of the current descending channel. The price broke above and held above the 20-period EMA, despite yesterday’s attempt to weaken the momentum. The RSI, positioned above 50, indicates further upside potential.
Breaking the resistance at the 50-period EMA (and the upper boundary of the channel) could pave the way for a continuation of the upward trend, similar to what occurred in August.
While the central banks of New Zealand and Canada are both in a rate-cutting cycle, the RBNZ has a clearer policy stance, signaling another 50-basis-point cut in February. Meanwhile, uncertainty surrounding the Bank of Canada’s future policy could increase, particularly in light of today’s GDP release. Concerns about economic growth, compounded by the 25% Trump tariffs looming in, may prompt the Bank of Canada to adopt a more dovish stance, raising the likelihood of another 50-basis-point rate cut.
Source: xStation5
