The Oil price seeks to move beyond $60.00 as prospects of US-China trade war easing surface. US-China talks are happening this week, aiming to de-escalate the tariff conflict.

West Texas Intermediate (WTI) hopes to climb past the $60.00 mark during European trading. Optimism surrounds potential de-escalation between the US and China, which could influence Oil prices.

Us China Trade Discussions

US and Chinese officials, including Treasury Secretary Scott Bessent, plan to discuss trade issues in Switzerland. The intent is to ease tariff tensions, with current US tariffs on China at 145% and China’s retaliation at 125%.

Reduced trade war fears boost Oil prices, as China is the world’s biggest Oil importer. OPEC+ plans to increase oil production by 2.2 million barrels per day since September 2022, affecting Oil price momentum.

WTI Oil, a type of Crude Oil, is often quoted in media and is a benchmark for Oil markets. Supply and demand, global growth, political instability, OPEC decisions, and US Dollar value affect WTI prices.

Oil inventory reports by the API and EIA impact WTI prices by indicating supply and demand changes. OPEC influences Oil prices through production quotas, affecting supply levels.

Market Reactions To Ongoing Negotiations

At present, we’re seeing Oil trudging upwards, with WTI poised nearby the $60.00 level. What’s propelled this move is the apparent thawing of tensions between Washington and Beijing, with talks this week stirring fresh belief that tariffs may soon be scaled back. While nothing definitive has emerged yet, markets are behaving as though progress is expected, and prices are responding accordingly.

The dialogue planned in Switzerland, where Bessent and his counterparts are to meet, appears to be more than symbolic. Tariffs remain high—145% on Chinese imports into the US and 125% the other way—so even minor revisions downward could revive trade flows between the two largest economies. That, in turn, has an immediate and visible impact on energy markets.

Remember, China continues to be the largest Oil importer globally. Any signal that its purchasing power could increase, whether through improved growth prospects or reduced tariff burdens, shifts the near-term balance in Oil markets. Notably, traders have already begun adjusting exposure in anticipation.

At the same time, OPEC+’s production levels continue to matter. The announced lift in collective output—2.2 million barrels daily since Q3 last year—adds volume to the system, tilting the supply side. Still, despite the ongoing supply expansion, prices have held above major support levels, largely due to demand optimism linked to restored geopolitical business flows. We’re not seeing a collapse in Oil even as more barrels enter the market, which says much about buyers’ expectations.

Price action around API and EIA stockpile figures continues to produce short-term movement. Recent inventory drawdowns have supported upward pressure, especially when falling stock levels contradict rising supply trends. It’s a data set fewer are ignoring now, particularly on Wednesday evenings and Thursday mornings, when volatility briefly spikes.

As traders, it’s essential to watch not just the output figures or macro headlines but also foreign exchange implications. The value of the US Dollar, for instance, has quietly grown in influence again, especially as the Fed maintains a hawkish stance. A stronger Dollar tends to limit Oil’s upside, making contracts more expensive in other currencies. So movements in USD can undermine otherwise bullish Oil flows, including those powered by geopolitical improvements.

With all this colliding, there’s a clear hierarchy taking shape in terms of drivers. International diplomacy is pulling sentiment upward, and unless talks break down, the immediate skew appears upward-bias. That said, with production still rising and refiners yet to show a marked increase in activity, supply levels can offset too much enthusiasm. The reaction over the next API release will give us better colour on buying momentum.

Position sizes should reflect the current volatility and the somewhat binary outcome of these trade discussions. A break above $60.00 needs confirmation through either further political agreement outcomes or another stockpile draw. Without them, buyers may not have the resolve to hold the line. We’ll seek clarity through December on whether improving demand or persistent oversupply tips the balance, but for now, response remains highly news-driven.

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For the week ending 2 May 2025, mortgage applications in the US increased by 11.0%, according to the Mortgage Bankers Association. This marks a recovery from the previous week’s decline of 4.2%.

Both purchase and refinancing activities saw an upturn, contributing to this growth. However, the average rate of the most popular US home loan remains high, hovering just below 7% after a notable rise in April.

Mortgage Application Insights

The noted rise in mortgage applications for the week ending 2 May 2025, up by 11.0%, tells us something fairly direct about current borrower behaviour — despite high borrowing costs, demand has bounced back. This appears to follow a somewhat lacklustre week prior, which featured a 4.2% drop in applications. As we’ve seen before, a couple of active days in the bond market can set off a reaction, which then shows up here in mortgage data a week or so later.

What stands out more though is not so much the swing upwards, but that it happened while the average 30-year fixed rate hangs just below 7%. That’s not small. It reflects sustained pressure in funding markets and broader expectations around rate cuts coming later than thought. People still borrowing at these levels — for both new home purchases and refinancing — indicates either a shift in sentiment or perhaps a belief that rates may not fall much soon. There’s always the chance too that folks are readjusting expectations after months of waiting on the sidelines.

From our perspective, this bit of data feeds directly into short-term rate positioning, particularly in rates volatility trading. We should treat these kinds of weekly figures as more than just housing stats — they serve as a form of sentiment gauge. When purchase and refi levels both move up at the same time during a high-rate period, it tends to reflect confidence that borrowing conditions aren’t worsening further — which makes short-end steepening trades less attractive in the immediate term.

Recent Policy Impacts

From Powell’s remarks last week and recent FOMC minutes, we already had a sense that policy will remain tight longer than many originally pencilled in. This acts as a weight over the belly part of the curve, but has kept the frontend stubbornly grounded. That situation doesn’t favour a meaningful fade in implied vol. A decent bit of the recent flattening has been unwound, but strength in mortgage activity — particularly this broad-based — could stall any immediate steepening. We can’t move too fast on rate-cut-dated positions just yet.

Also keep in mind that mortgage rates respond less to the Fed funds rate directly and more to the 10-year yield. The fact that activity bounced before yields made a persistent move down suggests that household expectations are now in flux. If we see follow-through next week, things might start looking a bit too hot for comfort for policymakers. That would likely keep pressure up on swaps spreads and act as a minor drag on duration-heavy exposure.

All told, in pricing terms, this data raises questions more than it settles them. If housing activity perks up this strongly while lending rates remain elevated, it’s not what usually happens when a downturn is underway — and that matters for how options are priced across the curve. A data point like this can shift skew and influence the upper strikes in payer ladders across multiple tenors, especially those aligned with cuts in late Q3 or Q4. The shape of SOFR futures tells us not enough of that is priced in yet.

From here, we watch to see if next week shows continuity or if this week’s pop is just mean reversion. Either way, the window for adding low-delta exposure at attractive levels is shrinking.

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Bitcoin has managed to hold above a critical resistance level, with prospects of reaching all-time highs. Recent movements are influenced by improving expectations around trade tariffs, which have also propelled stock market performance.

Currently, Bitcoin is stabilising while awaiting new developments, particularly details of the first trade agreement. The Federal Reserve is withholding rate cuts amidst this uncertainty, pending labour market impacts. The focus is thus on the anticipated trade deal, expected to be revealed by the week’s end, or Monday at the latest.

Market players are assessing whether a 10% rate is the floor, as higher rates could prompt a selloff. Conversely, lower rates might accelerate Bitcoin towards all-time highs. On the daily chart, Bitcoin broke through a resistance zone near 90K, stabilising around 95K as it awaits trade resolution news.

From a technical standpoint, buyers see good risk to reward at 90K for a rally, whereas sellers anticipate a break downward to push prices to 85K. Four-hour chart analysis shows an expanding rising wedge pattern. While buyers focus on maintaining upward momentum, sellers eye a pullback to the 90K level. The FOMC decision may present a chance for buying on market dips, as optimism endures regarding the trade negotiations.

With Bitcoin hovering above a pivotal zone, what we’re seeing now is a market in a holding pattern — not frozen, but pausing to gather direction. Price has cleared a major area near 90K and, with limited new drivers, begun consolidating just above. Stability just below 95K reflects cautious positioning ahead of macroeconomic data and clarity on trade policy.

Looking backwards, much of the rally appears to have been underpinned not only by better than expected signals from trade talks, but also by the broader relief that monetary tightening may ease sooner rather than later. Stock indices climbing in parallel have only added to this directional bias, offering a tailwind to risk assets across the board. However, the wind isn’t without gusts — it’s the calibration of forward policy that remains the missing piece.

From a rate-setting standpoint, the Fed has deliberately stepped aside, withholding further action while awaiting confirmation of economic softness or resilience. Labour data has provided enough ambiguity to keep speculation alive. All eyes rest now on whether the upcoming agreement alters inflation expectations sharply enough to sway policy. It’s a waiting game, but not one we can ignore.

In the shorter-term charts, patterns indicate less conviction than the daily timeframes would imply. The expanding wedge on the four-hour highlights that, although highs are being probed, the base remains vulnerable. A slip under the lower trendline opens a straightforward path to 90K. This level, previously a ceiling, is being watched closely to step into support. Movement here may not be dramatic, but timing will be key.

From where we stand, the market isn’t overleveraged, yet derivatives positioning shows a shift in balance. Premiums on perpetual swaps are starting to flatten, and the long-to-short ratio has dipped slightly. Traders who had anticipated instant continuation higher are now de-risking, although there isn’t clear evidence yet of aggressive shorts stepping in. Instead, there’s suggestion the market wants to reset some of that froth before potentially pushing again.

What’s important now is focus — not simply on levels, but on how the market reacts to the incoming data. Volatility around macro news releases may offer short windows for position-building, especially if liquidity remains thin during off hours. Minor retracements are worth watching, particularly if pushed by headlines rather than changes in on-chain flows. Momentum does not appear exhausted — if anything, it’s pausing for breath.

In terms of signals, bid depth in order books shows underlying interest building near 91K and thinning notably below 88K, hinting at where buyers are most comfortable adding risk. Short-term demand still favours rebounds from micro dips, but continuation will require either a breakout narrative from the trade front or firm detail from upcoming central bank commentary.

For now, we act with precision. Passive entries closer to technical inflection points — supported by data rather than guesswork — provide the clearest opportunities. Until headline risk fades, there’s no need to chase. Let the market come to you.

USD/CAD increased to around 1.3800 as markets anticipate the Federal Reserve’s interest rate decision, expected to maintain the current rate range of 4.25%-4.50%. This development occurs alongside a rise in the US Dollar Index, marking a value around 99.50.

Expectations that the Fed will keep rates stable is a result of uncertainty within the US economy. Concerns involve the impact of higher tariffs imposed by the US government, potentially leading to increased consumer inflation.

Trade Discussions And Tensions

Global market sentiment improved as the US and China planned trade discussions, although a major trade deal remains unlikely. Concurrently, trade tensions between the US and Canada have heightened, following comments by US leadership.

Attention turns to upcoming Canadian employment data for April, due on Friday, which will impact the Canadian Dollar. The economic indicators will provide insights into the health of Canada’s labour market.

The US Dollar holds a prominent position globally, constituting over 88% of worldwide foreign exchange turnover. Monetary policy decisions by the Federal Reserve continue to play a pivotal role in determining the Dollar’s value.

Quantitative easing and tightening are non-standard policy measures the Fed may use, affecting the Dollar’s strength accordingly. While easing generally weakens the Dollar, tightening tends to strengthen it.

USD CAD Rate Dynamics

The existing publication discusses the recent climb in USD/CAD to the 1.3800 mark, which has caught market participants’ attention as it coincides with general sentiment ahead of the Federal Reserve’s next interest rate decision. In essence, traders are betting that the central bank will opt to hold rates where they are: between 4.25% and 4.50%. That expectation is largely due to lingering doubts about the resilience of the US economy, particularly in light of newer trade policies which include higher tariffs. These tariffs could translate into further cost pressures on households, making goods more expensive and nudging inflation in an unfavourable direction.

Added to that is the broader strength of the US Dollar, reflected in the US Dollar Index moving closer to 99.50—a solid upswing. This shows increased demand for dollar-backed assets, often a sign that institutions are seeking safety or positioning themselves for tighter monetary conditions in the months ahead. Any strengthening in the greenback tends to influence dollar-based currency pairs such as USD/CAD, naturally pulling them higher unless offset by emerging strength in the Canadian side of the pair.

We also observe that despite some warming of relations between the US and China—that could ease commercial tension marginally—optimism over any comprehensive deal remains modest at best. Forward-looking statements and scheduled talks aren’t yet translating into decisive movement on policy. On the northern front, trade rhetoric between Washington and Ottawa has sharpened, and that friction could start working its way into economic figures and investor bias toward Canada-focused exposures.

All eyes now shift toward Friday’s labour report from Canada. Employment figures will paint a clearer picture of how well the domestic job market is coping. The loonie’s direction could be heavily influenced by whether hiring is keeping pace with wage growth and population dynamics. If the data tilts weaker than expected, especially in full-time employment or wage inflation, it could weaken CAD further against the USD as domestic rate expectations fade. Meanwhile, a stronger reading might prompt a rapid revision of those expectations, inviting some strength back into CAD.

It’s worth mentioning that with the US Dollar involved in nearly nine out of every ten foreign exchange transactions globally, shifts in Federal Reserve policy carry weight well beyond North America. The Fed also has a toolkit that can tilt the dollar’s direction even when interest rates are unchanged. Its use of balance sheet management—either by letting assets roll off (tightening) or buying more (easing)—has implications for broader liquidity and investor risk appetite. Depending on how Fed officials phrase their outlook, or how decisively they use such tools, we could witness noticeable shifts in USD valuation that spill over into correlated currency pairs.

Given these developments, we’ve observed that setups based on implied volatility are becoming more sensitive to both data and communication. Therefore, exposure needs to be adjusted with extra care amid such a macro-sensitive environment. Keeping an adaptable horizon, while re-assessing exposure both pre- and post-data release intervals, remains advisable. Fluctuations in central bank tone or domestic economic surprise could quickly reverse directional momentum built over consecutive sessions.

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USD/JPY is struggling to maintain upward traction, encountering resistance near 146.50, which is both the March low and the 50-day moving average. The currency pair has broken through a channel, suggesting a lack of sustained upward momentum.

The recent low at 142 is a critical support level. If this fails, the downtrend may continue towards targets of 140/139.50, with a further projection at 136.50.

Structural Changes In Trading Profile

What this means — put plainly — is that momentum to the upside has faded, and we’re seeing the pair stall just underneath what appears to be a stubborn layer of resistance. Price action around the mid-146s has been sticky, with the 50-day moving average reinforcing the mid-March floor now acting as a ceiling. It’s not just a technical barrier either; we’ve had a well-defined ascending channel breached, which weakens the case for continuation trades to the upside. Structurally, that’s changed the trading profile.

For us, the break of the channel suggests that the uptrend is no longer valid in the near term. Momentum is now neutral to negative, and there’s not much left to hold sentiment if we slip below that 142 handle. It’s more than just a number — it coincides with a series of daily lows formed during pricing congestion in early January, meaning there’s a memory there. Weakness beneath it would open up room towards 140 and then potentially into the 139.50s, both levels where we’ve previously observed buying interest fade into reversals. Beyond that, the area around 136.50 becomes relevant, not only from a Fibonacci retracement standpoint but also because it acted as a shelf during last October’s consolidation.

Directionally, this leaves us with few forward bid catalysts, unless fresh policy language or surprises shift the dynamic. For now, the tone feels heavy, and the burden is on buyers to reclaim footing — not least because volatility is already drifting lower, making premium pickup on long gamma positions somewhat limited unless risk is tightly managed.

Positioning And Risk Management

From our side, we’re now favouring lighter positioning through the top end unless reacceleration comes with volume and a clear reclaim of 146.70 or above. Until then, we’re comfortable trading reversions within this tightening structure. If 142 breaks, short gamma exposure should be reassessed. There’s a temptation to try catching downside extensions towards 140 with calendar spreads or flys, but those should be built thoughtfully, especially with implieds still discounting a narrow range.

We’re mindful of upcoming macro data — especially anything that reshapes yield differentials — though in the absence of such drivers, we think these technical levels remain the best guidance for directional bias. Skew near the lower boundary warrants watching, as positioning may start to lean flatter or even turn defensive into any broader risk-off shift.

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The S&P 500 has experienced recent gains due to decreasing tensions and positive outlooks on trade deals. This optimism shifted the market from pessimism to a hopeful stance, creating a possibly overstretched positioning.

Today, the Federal Open Market Committee’s policy decision could introduce some short-term market weakness if there is resistance to the current dovish market pricing. However, hopes for favourable trade deals are expected to continue supporting the uptrend, unless a disappointing trade deal occurs, which could alter market expectations negatively.

Technical Analysis on Support and Resistance

On the 1-hour chart, there’s an identified support zone near the 5,590 level, aligned with a trendline. This area might attract buyers aiming for a rally to new highs, provided they manage risk carefully below the trendline. Sellers might look for a price drop that extends the decline towards the 5,456 level.

This note points out recent strength in US equities, driven mostly by reduced geopolitical strife and an optimistic take on potential trade resolutions. The mood has shifted quickly—from overly negative to remarkably upbeat—which has possibly left trader positions overly reliant on one direction. When we see markets tilt this way, there’s often less room for new momentum unless something fresh validates the move. In short, there’s a lot baked into current prices, and the market may have got ahead of itself.

Market Reactions to Policy Decisions

Meanwhile, policy rhetoric is again in focus. The FOMC’s stance carries extra weight at times like these. If policymakers push back, even lightly, against a dovish interpretation of future expectations—particularly around interest rates or inflation tolerance—there’s scope for volatility. Traders who are assuming easier policy for longer should prepare for any friction there. No reaction is ever clean-cut, but a pushback could jar pricing. We’re not trying to guess direction, but it’s worth recognising that positions based on too much optimism may not hold easily.

Technical structure gives us clearer guidelines. There is a defined zone around 5,590 where buyers may be waiting, especially as this level lines up with a clear trendline that has been respected in recent sessions. When you see price cluster at certain zones and bounce, it’s usually not accidental—momentum buyers are often waiting nearby. We would treat this area as a potential reloading point, though with care steered beneath it, in case sentiment shifts mid-session.

Conversely, a sustained drop under that trendline could pave way for sellers to build momentum down to the next recognised floor around 5,456. That’s not just a number on the chart—it reflects the last place where demand absorbed supply convincingly. Those managing directional bets should monitor price action as it approaches this barrier, especially intraday. What matters here isn’t volume spikes alone, it’s how prices behave as they interact with ranges recently defended.

Recent price movement, shaped heavily by external sentiment and assumed policy tailwinds, may be delicate heading into the new week. The balance of risk and reward now favours reaction management rather than bold new entries. If volatility picks up near known support or resistance levels, control position sizing accordingly. In the next few sessions, flexibility will likely matter more than conviction.

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The USD/JPY currency pair is projected to consolidate within a range of 142.20 to 144.00. Over a longer period, it is expected to trade between 142.20 and 146.70.

Recently, the USD experienced a sharp decline and closed at 142.41, a drop of 0.90%. It rebounded strongly afterwards, with indications of slowing momentum and oversold conditions suggesting further consolidation.

Short Term Range Anticipation

In the short term, USD/JPY may hold within the 142.20 to 144.00 range. A sustained break below 142.20 could lead to a deeper pullback in value.

There are risks and uncertainties in the market, and the provided data serves informational purposes without specific recommendations for buying or selling assets. It is vital to conduct thorough research before making investment decisions, as investing in open markets carries risks, including potential losses.

The existing passage outlines a scenario in which the USD/JPY pair, having fallen quickly to 142.41 before recovering, enters a phase of consolidation. This means the sharp move lower has shown signs of exhausting itself—for now. The pair is now seen trading within defined limits: near-term between 142.20 and 144.00, and over the longer term extending up towards 146.70. Such consolidation zones can offer a reprieve after rapid price action, becoming regions where both buyers and sellers re-assess.

Following the decline, momentum has begun to fade. Conditions appeared oversold at the lows. Historically, when prices drop this swiftly and then stall, especially around prior technical supports, we often see reluctance by sellers to push further without fresh catalysts.

If the price were to sustain a move below the 142.20 level, however, the support conviction would weaken, prompting broader downward re-evaluation. Until then, short-term positioning will likely remain neutral, leaning towards selling near resistance and buying near support.

Market Volatility and Strategy

The retracement amid oversold signals gives an indication that sellers may be pausing or exiting briefly, rather than committing to fresh downside. This type of setup often lends itself to range-driven strategies that use existing price parameters as reference.

In the current conditions, what this tells us is that broader volatility has stepped back after a reactive thrust, potentially presenting fewer directional surprises in the near-term. But once boundary levels like 142.20 are tested again, we may see renewed directional energy.

We find ourselves in a reactive rather than proactive mode. The chart is not asking for aggressive conviction yet—tools like RSI or MACD may also reflect this deceleration. Until the pair breaks convincingly above 144.00 or falls under 142.20, short gamma exposures may be more prone to premium decay, as movement compresses.

For those active in structured risk, smaller deltas within the current band may offer value. Historical volatility readings are likely to compress further, opening possibilities for strategies that benefit from range-bound trading, provided tail scenarios are hedged.

The earlier fall was strong and may appear directional, but the failure to build momentum lower—and the volume tapering near that base—signals exhaustion, rather than continuation. If momentum indicators align and macro signals remain muted, the pair could drift rather than trend.

Yields and rate expectation differentials have not moved far enough to cause disorder in the cross, meaning the action is more technical than fundamental at this stage. This affects forward premiums as well, flattening the incentive for near-term trend longing.

In these settings, we find utility in waiting for breakouts rather than trading in anticipation. It’s not always about catching the initial move—often, the reward lies in verifying that a breakout is genuine and supported.

While the broader risks are understood, the current hesitation in direction presents a repeating structure. Until there’s confirmation either side of the set brackets, trading within them—and being aware of their edges—may serve better than leaning into directional assumptions.

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Eurozone retail sales for March decreased by 0.1%, contrary to the expected steady figure of 0.0%, according to data from Eurostat. The previous month’s figure was revised down from an initial 0.3% gain to 0.2%.

In March, there was a reduction in the volume of retail trade for food, drinks, and tobacco, which shrank by 0.1%. Non-food products also saw a similar decline of 0.1%.

Automotive Fuel Sales Increase

However, the fall was slightly balanced by a rise in sales of automotive fuel, which increased by 0.4%. This data reflects specific changes within different sectors of the retail market.

This economic data points to a rather subdued consumer environment across the euro area during March. The initial projection had been for flat activity in retail trade, and although the actual drop of 0.1% might appear marginal at first glance, the revision to February’s figure makes that change more meaningful. That slight downward tweak to the prior month, from 0.3% to 0.2%, suggests a subtle underlying weakness in the trend over time.

When we consider the breakdown, it’s clear that the figures aren’t random or without cause. The dip in sales of food, beverages, and tobacco is particularly telling. These are staple goods—typically more resilient to short-term shifts in consumer mood. Their decline, though small, may reflect tighter household budgets or perhaps even seasonal distortions not captured in the projections. Two categories moved lower, but only fuel consumption managed to push upward. Though a rise of 0.4% in automotive fuel stands out on the surface, this alone won’t offset negative pressure in other areas, especially with non-food items also in reverse.

Looking back across recent months, this mix of minor fluctuations suggests the consumer is not stepping up at the moment. That spells a very particular dynamic for implied volatility and price movement linked to broad consumption indices. When trade narrows this way, we tend to see the impact flow into rate expectations slightly more gradually. So, in our positioning, we should lean into the short-term sensitivity of rate-linked products and keep a closer watch on pricing around Eurozone CPI releases.

Market Implications and Forward Outlook

This latest print does not provoke immediate concern, but markets react to momentum more than to point changes. With demand now showing a sideways trend, any surprise later this month from hard activity data or survey releases can invite sharper reactions than they might under different circumstances.

Recent commentary from policymakers like Schnabel and Villeroy suggests that internal demand remains a sticking point for economic momentum. Their forward guidance hasn’t changed, but softening retail adds a layer of doubt around upcoming quarterly projections. We interpret this as a mild downgrade to confidence in the recovery thesis that had been forming in March.

Fixed income traders have already begun to reflect a more cautious view—front-end euro rates have firmed slightly, revealing that markets are beginning to pull throttle back on the pace of easing expectations. Given the forward calendar, it’s unlikely that this trend will resolve anytime soon.

From where we stand, there will need to be a careful reassessment of short-duration volatility structures. The tension between headline inflation and core consumption won’t stay compressed forever. Better to adjust ahead than react once it’s priced in. Keep the balance tight, but don’t ignore the weakness in high-frequency consumption data. It isn’t noise.

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The New Zealand Dollar (NZD) may rise above 0.6030 against the US Dollar (USD) but could struggle to keep its position beyond this mark, with 0.6060 being unlikely. In the long term, NZD is anticipated to have an upward trend towards 0.6030 and possibly extend to 0.6060.

In the short-term view, NZD recently surpassed predictions, reaching a high of 0.6013. Despite this rapid momentum increase, overbought conditions might hinder sustainability above 0.6030, and reaching 0.6060 seems unlikely, with 0.6000 as new support.

Medium Term Outlook

Over one to three weeks, NZD was expected to move within a range but exceeded expectations by reaching 0.6013. If NZD holds above the support level of 0.5950, its momentum may continue, with potential to reach 0.6030 and possibly 0.6060.

All projections involve risks, and trading decisions should be based on thorough research. The information shared is not a trading recommendation or guarantee and exposes one to various risks, including the potential loss of investment. As such, financial guidance may be sought if needed.

What’s unfolded so far suggests that the New Zealand Dollar, while pressing higher than forecasted, is entering a stretch where follow-through might be uneven. Last week’s climb to 0.6013 was notably sharper than markets had priced in. That kind of momentum, when driven by short-term positioning or squeeze dynamics rather than fresh macro data, doesn’t tend to come without pullbacks. We’re now looking at a trading environment where the previously considered upper threshold of 0.6030 is being tested, but it’s being met with hesitation.

Here’s what we understand: price action exceeding 0.6010 with such pace indicates that buyers are active. However, momentum indicators across multiple intraday timeframes are sending a mixed set of signals. While they confirm past strength, they also point to stretched upside conditions. This kind of setup often draws in sellers aiming to take advantage of reduced directional drive. Therefore, any move toward 0.6030 might struggle for traction without a break in tempo or a shift in risk sentiment.

Potential Resistance and Support Levels

The next area of interest sits just above — 0.6060 — which many view as a distant target for now. It’s not so much a wall as it is a threshold that lacks support from either volume or conviction. Moves past 0.6030 would need a catalyst, perhaps a dovish shift from the Federal Reserve or stronger-than-expected local data, though neither seems imminent. That said, should 0.6030 hold as a new intermediate resistance without quick rejection, it hints at a broader shift in medium-term bias that shouldn’t be ignored.

On the back foot, support has firmed around 0.6000, and further down at 0.5950, which had earlier served as a base during the previous ranging behaviour. A break below either of these levels would alter near-term risk, but until then, we expect traders to treat dips towards 0.6000 with interest.

From a two-to-three-week perspective, there is still room for price expansion if the 0.5950 area remains intact. It has historically acted as a stabiliser during periods of uncertainty. If the currency maintains buoyancy above that level, then incremental moves toward 0.6030 stay within reach, albeit with a declining probability. Beyond that, the jump to levels near 0.6060 would demand clarity either from economic surprises or central bank tone – components that we don’t have in play right now.

Volatility across currency pairs has been narrowing, and while breakouts like this can promise movement, they can also mislead. Overbought signals, often dismissed in strong trends, might carry more weight here if buyers exhaust themselves around a known ceiling. Furthermore, the reaction at those resistance levels should be monitored closely for divergence, particularly if volumes fail to keep up with attempted pushes higher.

The takeaway is this: while upside targets are visible on the horizon, each step upward appears less convincing than the one before. Market participants may treat rallies toward 0.6030 as trials rather than trends. A cautious approach would involve watching how prices behave near the 0.6000–0.6030 region and being prepared to reassess swiftly.

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The UK construction sector showed an ease in its downturn as of April, with a PMI of 46.6 compared to the expected 45.8. House building displayed some resilience, while commercial construction continued to decline, experiencing its fastest decrease since May 2020. The sector remains under pressure despite these improvements.

While construction output levels continued to decline, the rate of decrease was the slowest in three months. This was due to reduced contractions in residential building and civil engineering. However, commercial construction’s decline accelerated, influenced by risk aversion and cautious spending decisions. Cost pressures remained strong, with only a slight reduction in input price inflation from the previous month’s 26-month peak.

Business Activity Expectations Rise

Despite challenges, there was a slight improvement in business activity expectations for the year ahead. Output growth projections reached their highest level this year, with optimism around a potential turnaround in residential building workloads. Survey respondents noted rising prices for raw materials and increased supplier payroll costs, despite a drop in input purchasing.

The information above highlights the latest PMI reading for the UK construction sector, which, although still indicating contraction, was slightly better than forecast. A score below 50 reflects a decline, yet the figure of 46.6 suggests the pace of fall has softened. Most of the easing stemmed from a stabilisation in housebuilding and civil engineering work, though other areas, particularly commercial construction, saw sharper weakness—its downturn now the steepest since the first wave of pandemic disruptions nearly four years ago.

This gives a mixed picture. On the one hand, a few less worrying figures and a slowdown in downward momentum could suggest some near-term steadiness. The market appears to be reading this as a hint that conditions, though still difficult, may not worsen in the immediate future. On the other hand, commercial demand seems to be under fresh strain, with firms hesitating on projects and remaining highly cautious amidst broader cost concerns.

Price pressures have not eased in a helpful way. The rate of input cost increases remains elevated, only slightly down from a recent 26-month peak. Firms continue facing higher prices for materials alongside escalating wage bills. Purchasing levels have dropped, and there’s no surprise in that. It’s clear that companies are trimming orders to manage costs and reduce overexposure to price shifts.

Short Term Positioning Considerations

Interestingly, business optimism did tick higher—not dramatically, but enough to notice. Expectations for the year ahead improved, especially in residential building, where hopes are pinned on a lift in demand. These forecasts, although just that, likely reflect tentative planning assumptions more than firm commitments. We interpret this as a sign that some developers may be contemplating reactivation of delayed projects, but only if economic visibility improves.

From a positioning angle, short-term sensitivity to input cost shifts and construction output figures will likely increase. Any fresh data on raw material prices or order books could have sharper-than-usual effects. Stronger-than-expected declines in commercial activity often result in steep recalibration of near-term margin outlooks. That said, resilience in housing could create short-term positioning opportunity where consensus has skewed too far towards pessimism.

We expect shorter-dated maturities to show increased reaction to inflation consequences stemming from wage growth and materials pricing, especially as supplier wage costs nudge higher and throughput remains restrained. Watch for faster propagation of these shifts into adjacent industrial components—it’s seldom confined when supply disciplines across sectors are this bound up.

Sentiment is not recovering in unison across segments. Rather, it’s the divergence between still-falling commercial momentum and tentative residential demand that could serve as an opening for directional assumption. Any updates indicating changes in public-sector contract timelines or reassessment of capital expenditure by large builders may prompt active adjustment.

In our view, paying close attention to forward-looking indicators—such as supplier delivery times or input price expectations—would be more informative than relying solely on output figures, which lag unfolding shifts in sentiment and supply. The direction from here will rest far less on backward-looking data and more on the early signs coming through procurement and expectations surveys. Modelling risk with wide cost margins remains advisable.

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