NZD/USD momentum event triggered

Is the short-term bull run almost over for the NZD/USD?

Charts (4)

On the U.S. economic data front, the Mortgage Bankers Association's mortgage applications declined 5.1% in the week ended July 31st after falling 0.8% in the prior week. The ADP research institute's July jobs report showed a gain of only 167 thousand jobs, well below the 1.2 million estimate compared to an upward revised 4.31 million in June suggesting the increase in coronavirus cases is putting pressure on the job market. The trade deficit narrowed to -50.7 Billion in June from a revised -$54.8B in May. Finally, the July ISM Services Index increased to 58.1 topping the 55 estimate and the June reading of 57.1.

On Thursday, Initial jobless claims are expected to increase by 1.4 million for the week ending August 1st. Continuing claims are anticipated to reach 16.9 million for the week ending July 25th 

The Euro was higher against all of its major pairs with the exception of the CHF. In Europe, July Markit Services PMI (final reading) were released for the Eurozone at 54.7 (vs 55.1 expected), for Germany at 55.6 (vs 56.7 expected), for France at 57.3 (vs 57.8 expected) and for the U. K. at 56.5 (vs 56.6 expected). June European Retail sales were released at +5.7%, vs +5.9% on month expected.

The Australian dollar was mixed against all of its major pairs.

Using the "technical Insight" research tool under the Market Analysis tab, a bearish momentum technical event has been triggered. We are seeing downward momentum now that the closing price is trading lower than 10 bars ago. 

Source: GAIN Capital, TradingView

Momentum measures the velocity of price changes. For a 10-bar momentum, we take the difference between the last bar's close and the close 10 bars ago and we plot this as a line fluctuating above and below 0 which can be used as buy and sell signals when in agreement with prevailing trend analysis. Momentum is significant because it signals the strength of price trends. A healthy price trend tends to exhibit strong momentum, while weakening trends often have decreasing momentum indicating a trend reversal or correction.

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