GBPNZD Retracement Setup (May 31, 2017)

Recall that the pair also broke past the neckline of a double bottom pattern, indicating that further gains are in the cards.

Applying the Fib tool on the latest swing low and high shows that the 61.8% retracement level lines up with the former resistance and neckline at the 1.7700 major psychological mark, which might now hold as support. If so, the pair could make its way back up to the swing high near 1.9000.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside while stochastic is indicating oversold conditions. However, the gap between the moving averages is narrowing to indicate that a downward crossover and pickup in bearish pressure could come into play.

The latest poll from YouGov suggests a narrowing lead for PM May's Conservative Party and indicated that it would fall 16 seats short of securing the majority. This could mean more political uncertainty down the line and a weaker bargaining stance for the UK government in Brexit talks.

Meanwhile, the RBNZ just released its Financial Stability Report and mentioned that risks are fading. The central bank reiterated that the country's financial system remains sound but that risks stem from higher funding costs. The RBNZ also noted that house price pressures are slowing but are still elevated relative to income and rent.

By Kate Curtis from Trader's Way