• NZD/USD 1.3%
• AUD/USD 1.2%
• EUR/USD 1.2%

NZD/USD

Technical Overextension Powers Kiwi: Coupled with a technical overextension, bidders returned for the New Zealand dollar buying up the underlying major right below the 0.6000 handle.  The currency pair has lost over 700 pips over the course of the month as interest rate cut speculation mounted on a wider deficit and slower growth prospects.  However, sparking a short term rally in the morning hours, business confidence was seen rising better than previous readings.  According to the report by the National Bank of New Zealand, businesses may be looking forward to an upcoming interest rate cut in bolstering a near term pickup in consumer demand.  The reduction in the overnight cash rate would additionally lower the cost of funds, potentially boosting the bottom line for most entities.  As a result, carry trade initiation and speculative longs entered the session pushing the currency pair higher to post the highest percentage gain.

AUD/USD

Next Up, Retail Sales: Higher new home sales data combined with technical buying propped up the underlying spot on the session.  With interest rates a deep dynamic in the currency markets currently, it's no surprise that the new home sales report lent to near term strength.  February home sales rose 7.6 percent in the month.  Adding to the buying momentum was speculation of a stay on rates when central bankers meet next week.  Expected to keep rates at the current 5.5 percent, the housing sector data lends to the notion that consumer resurgence may be on the horizon.  As a result, although potential remains tepid, inflationary pressures could build heading into the summer months.  Next up for traders are the retail sales figures for the month of February.  Rising 0.8 percent in the previous month, sales are expected to keep pace, although pulling back slightly.  The positive figures should confirm the current sentiment that rates should be kept steady.  However, any downside weakness could translate into a technical break below.

Rumorville: Stops on long initiatives are placed slightly below spot at 0.7135 as interest remain skeptical of potential upside as we enter the Asian session.

EUR/USD

Technical Bidding For Euro: Traders ignored the positive data and bid the euro higher in the overnight session.   The move against the greenback was exacerbated by stop orders being tripped up over the 1.2100 figure, prompting any existing short to be squeezed.  Currently riding higher at 1.2160, the pair looks to run into a barrier ahead of plenty of U.S. economic datatomorrow.   Consumer confidence, factory orders and manufacturing data look to lend the dollar a hand after today's debacle.  The surveys look to offer plenty of event risk as they will be scrutinized for further in establishing directional bias interest rates.  Expected to rise to a reading of 87, the consumer confidence figure will pose one of the biggest concerns with factory orders not to far behind.  At this point, should economic data be negative for further hawkish actions, the 1.2200 handle poses as the near term barrier.  Stops reside at the area making it opportune for volatility on the session.

Rumorville: Selling interest surrounds the 1.2155 and 1.2165 figures with tight stops behind at 1.2165/70.  Further selling rests atop the 1.2200 resistance making it difficult for higher bidding above.  Bids look for a bounce back to 1.2105 for reinitiation.

Richard Lee is a Currency Strategist at FXCM.