Wednesday’s forex action saw a clear divide: the U.S. dollar maintained its dominance, piling pressure on the euro and the New Zealand dollar, while the loonie (USD/CAD) rode a bullish wave. The EUR/USD pair slid persistently after failing to hold support, reflecting renewed dollar strength on the heels of robust U.S. data and Fed commentary. In contrast, USD/CAD kept charging higher amid improving risk appetite (oil prices holding up and Canada’s relative yields). The NZD/USD plunged after the Reserve Bank of New Zealand (RBNZ) cut rates, reinforcing the kiwi’s slide from earlier volatility. Traders remain on edge into the afternoon: Fed minutes are due at 18:00 GMT, and broad risk sentiment is shaky as U.S.-EU tariff talks flare up and early U.S. election chatter bolsters safe-haven demand.
EUR/USD
Technicals in Focus
EUR/USD has been grinding lower since Tuesday, carving a series of lower highs and lows on the 5-minute chart. Price recently broke a short-term uptrend line and key intraday supports around 1.1300–1.1280, suggesting bearish momentum. Technical indicators on the M5 chart appear oversold (RSI well below 50, accelerating MACD down), hinting only small relief rallies. In fact, analysts noted that a decisive break below ~1.1255 would “turn the bias back to the downside”. The next clear support zone lies near the May 27 low at about 1.1240, followed by 1.1200. Resistance sits at the 1.1300–1.1320 area and overhead pivot near 1.1350 (where the 50-period MA lies). In summary, EUR/USD’s structure is bearish unless a convincing climb back above 1.1320 materializes.
Trading Strategy
Given the downtrend bias, look to sell on minor rallies. Aggressive traders could enter shorts around 1.1300–1.1330, placing initial targets near 1.1250 and later 1.1200, with stops above 1.1360. A conservative approach is to wait for EUR/USD to briefly recover toward 1.1290–1.1310 (now resistance) and fade, targeting 1.1220–1.1200. Protective stops are advisable above yesterday’s intraday highs (around 1.1340–1.1350). Bulls might prefer an inflection scenario: only a sustained break above 1.1355 (as highlighted by ActionForex) could invalidate the decline and open a rebound toward 1.1400. Until then, sellers control the technical picture.
USD/CAD
Technicals in Focus
USD/CAD has powered upward, decisively piercing recent resistance. The pair climbed above the 1.3750–1.3780 consolidation band and is now challenging a key barrier near 1.3850–1.3870 (last week’s high). Intraday momentum is strong: bullish MACD and rising RSI suggest follow-through potential. Chart patterns show a steepening uptrend on M5, and USD/CAD is holding above all major moving averages. On the 5-min candles, price has repeatedly bounced off support near 1.3780, signaling buyers stepping in. A known pivot lies at 1.3880; above that, the next significant resistance is around 1.3950, with 1.4014 marked by analysts as a major hurdle. Overall, technicals favor continuation higher while above support. A pullback toward 1.3800–1.3820 (now support) may offer a new buying opportunity.
Trading Strategy
Maintain a bullish stance. Consider buying dips in the 1.3780–1.3820 area, with an eye on targets at 1.3900 and 1.3950. A break above 1.3870–1.3900 opens the way toward 1.4000, where traders may re-evaluate amid overhead resistance. Stops can be modestly placed below 1.3750 (recent pivot) to limit risk. For those more cautious, waiting for a clear break above the intraday high (~1.3880) could be prudent before adding longs. Conversely, shorting USD/CAD is discouraged unless price swiftly reverses and falls back below 1.3780 (invalidating the uptrend), which seems unlikely given the current USD strength and as long as 1.4014 stays intact.
NZD/USD
Technicals in Focus
The Kiwi dollar came under heavy selling pressure early Wednesday after the RBNZ decision, slicing through several support levels. NZD/USD fell through 0.6080 and later even the 0.6000 mark, reflecting a sudden, forceful decline. The M5 chart shows a clear bearish channel; price consistently capped near the 5-EMA and kept sliding. Momentum indicators are deep in bearish territory (stochastic and RSI are oversold), though a dead-cat bounce is possible. Key support was broken at the prior low around 0.6010, leaving 0.5980 and the psychological 0.6000 as near-term magnets. Resistance has formed at the underside of broken support (about 0.6040–0.6060), confirming that rallies are likely to be short-lived. In sum, NZD/USD’s structure is decisively bearish. The RBNZ’s cut to 3.25% echoes through the charts – sellers remain firmly in control.
Trading Strategy
Short-bias strategies are favored. Traders could short near any interim bounce toward 0.6030–0.6050, targeting 0.5980 and ultimately 0.5920–0.5900. A stop above 0.6100 (just above the broken support zone) would guard against a snapback. One could also sell now with a tight stop above 0.6050, aiming for 0.5980–0.6000, given the strong downward momentum. The Fed minutes at 18:00 GMT may spook markets further, possibly exacerbating the U.S. dollar’s rally and pushing NZD even lower. Conversely, we remain wary of a short-covering rally if risk sentiment suddenly reverses. In that case, NZD/USD would need to reclaim 0.6100 to cast doubt on the bearish trend. Until then, downside targets around 0.5900–0.6000 are realistic.
Market Outlook
The current divergence reflects wider economic themes. The Fed’s patient stance (no rate change at early May’s FOMC) and hints at cuts later support a strong USD short-term, while looming U.S. elections keep traders cautious. As noted by analysts, “election premiums are now a main driver of USD pricing”, helping the greenback resist pressure. Global risk trends are mixed: renewed U.S.-EU tariff scuffles have spiked volatility, which tends to favor safe-havens and weighed on currencies like NZD. Looking ahead, traders will eye the Fed minutes today, U.S. PCE inflation data, and Bank of Canada remarks for clues on policy divergence. Overall, unless major data surprises occur, the USD is likely to retain its upper hand into the summer. This FX report’s “urgent” tone underlines the opportunistic nature of the moves – after all, in today’s markets, late-May volatility has created clear breakout trades in EUR/USD, USD/CAD, and NZD/USD.