NZD/USD on the Edge

Posted on January 29, 2009 by Yohay
Filed Under Forex Opinions | 1 Comment

The New Zealand dollar got two major blows this evening: A big rate cut and a bad Trade Balance. Looking at forex charts, NZD/USD is on the edge of major support line. Breaking it could show the way for deep plunge.

First, RBNZ cut the interest rate by 1.5%! This dramatic cut was more than 1% that was expected. The new Official Cash Rate is now at 3.5%. RBNZ stated that interest rates could go even lower in New Zealand. 

The second blow for the kiwi was the Trade Balance. Early expectations stood at a negative balance of 100 million. But the actual figure was -347M. Also here, it was much worse than expected.

When doing a technical analysis of NZD/USD, we can easily see the support line:

 

NZD/USD Daily Chart

0.5150 is a line that NZD/USD has had a hard time to cross. Also after these shakes, NZD/USD has managed to stay above it.

But how long will it last? With a bad economic outlook and and expectations of more rate cuts, NZD/USD will probably tumble. If this support is breached, it will go down a lot.

The next major economic indicator for the New Zealand dollar is the monthly Building Consents due on Thursday, at 21:45. If it also disappoints, we might see a breach.

Enjoyed the post? You may want to subscribe by RSS feed or Email.

Tags: ,,,,,,

» «

Comments

One Response to “NZD/USD on the Edge”

  1. NZD/USD Jumps After Employment Data on February 5th, 2009 12:56 am

    [...] It all began last week, when the RBNZ lowered interest rates by a dramatic 1.5% to 3.5%, being temporarily lower than the Australian interest rate. At that time, the Kiwi was on the edge. [...]

Leave a Reply




Bad Behavior has blocked 1648 access attempts in the last 7 days.