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Day three: closing our AUD/NZD position

I suggested AUD/NZD could pull back to the 1.0820 to 1.0800 level, given momentum on the hourly chart was starting to accelerate to the downside, and that has come to fruition. 

In New Zealand we’ve just seen the NZIER business confidence come out at the highest level in twenty years. This is of great interest, as it puts the probability of a rate hike from the RBNZ at the January 31 meeting at around 50%. The Q4 CPI print on January 21 is now a key event risk for the NZD, and a number above 1.4% could show that inflation has stabilised and headed towards the upper range of its 1-3% target.

Technically the daily chart suggests being long AUD/NZD, however the hourly chart still throws up the prospect that the pair could go lower, so I am fairly neutral from a technical perceptive. From a fundamental stand point, the prospect that the RBNZ hike rates in January is too much of a risk to be long and thus I close my long position at current levels 1.0805 for a seventeen pip profit.

For me when the technicals and the fundamentals don’t marry, I will generally back the technicals. However when the hourly chart paints a more bearish picture than the daily, I’ll tend to back the short-term view, mix in bearish fundamentals and this is enough of a reason to close longs.

AUD/NZD
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