FX.co ★ Trading plan for 21/05/2018

The most influential event on the balance of power on the currency market at the beginning of the week is a suspension in a trade dispute between China and the US. In the result, the global investors can observe weakening of the yen, increases in equity and futures markets on indices as well as strong increases in commodity prices, including agricultural products with soy at the forefront.

This week's macro calendar does not contain many important publications, which should support the maintenance of the current trends. The minutes from the FOMC meeting will confirm the bank's optimism and readiness for another interest rate increase already in June. PMIs from Euroland will be analyzed in terms of signals of a rebound in the weak first quarter. The pound may respond to inflation and retail sales data from the United Kingdom.

On Monday, May 21, the event calendar is not full of the important data releases, but overnight, the Retail Sales from New Zealand, Rightmove House Prices from the UK, and Trade Balance data from Japan were published. Later during the day, there are some speeches scheduled form the FOMC members: Raphael Bostic, Patrick Harker, and Neel Kashkari.

NZD/USD analysis for 21/05/2018:

The Retail Sales data from New Zealand was very disappointing as they were released at the level of 0.1% while the market participants expected 1.0 % after the last month's increase of 1.4%. Unfortunately, this kind of data fits with other signs that the New Zealand economy is slowing and will have a significant impact on the downside risk to the nearest gross domestic product forecast. Moreover, the global investors should expect that household spending growth will remain modest over the coming year as the housing market cools in response to the government policy changes. In this economic situation, the interest rate hike by RBNZ will be postponed again and it can make NZD weaker in the mid-term across the board.

Let's now take a look at the NZD/USD technical picture at the H4 time frame. NZD was pushed lower immediately on the data release and sold a little further down. The technical resistance at the level of 0.6946 still hasn't been violated and the momentum stays below its fifty level as well. The continuation of drops is very likely and the next technical support is seen at the level of 0.6815.