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NZD/USD Forecast Jan. 19-23 2015

The  New Zealand dollar  had a relatively stable week amid a global storm: it bounced off downtrend resistance. We now have a busy week of events, with inflation data taking center stage. Will the pair break out of range?  Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

Kiwi/dollar was unaffected by the shocking Swiss  announcement about the removal of the peg, and remained stable throughout the week. Food prices went up, and that also supported the kiwi. In the US, data was quite mediocre, but also mixed, not shaking the greenback too much against the NZD.

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NZD/USD  daily chart    with support and resistance lines on it. Click to enlarge:

NZDUSD technical analysis January 25 29 2015 New Zealand dollar fundamental outlook

  1. NZIER Business Confidence: Monday, 21:00. The  New Zealand Institute of Economic Research surveys around 2500 businesses for its high impacting quarterly assessment.  The indicator dipped to 19 points in Q3 2014, falling from higher levels but still reflecting optimism.
  2. GDT Price Index: Tuesday, during the day. This is  also known as the price of milk – dairy products are New Zealand’s most important export. In the last two bi-weekly auctions, prices were on the rise and this supported the kiwi. After the 3.6% rise seen last time, a drop cannot be ruled out.
  3. CPI: Tuesday, 21:45. New Zealand  releases inflation data only once per quarter, thus making each publication more important for the currency. Prices advanced by 0.3% in Q3 and are now expected to remain flat quarter on quarter. Inflation is still OK in New Zealand, supporting the high 3.50% interest rate that the  RBNZ manages.
  4. Business NZ Manufacturing Index: Wednesday, 21:30. This  manufacturing gauge has shown economic  in recent months, with scores of more than 50 points. The figure for November dropped to 55.2 points from the previous highs. Some stabilization is likely here.

* All times are GMT.

NZD/USD  Technical  Analysis

Kiwi/dollar began the week with a slide below downtrend resistance (mentioned last week). After  making a false break under 0.7715, the pair recovered swiftly and challenged the trend line once again before settling at 0.7779.

Live chart of NZD/USD:

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Technical lines, from top to bottom:

The round level of 0.82 is certainly worth watching. It is followed by the  initial September low of 0.8120.

0.8075 was one of the cycle  lows and now works as resistance.  Even lower, 0.8050 provided support for the pair back in February and is the last line before the very round figure of 0.80.

0.80 is now key resistance on the upside. Just below, the old  resistance line of 0.7975 is coming back to play after capping the pair in October.

0.7930 was a double top in October’s recovery and is important to watch. It is followed by 0.7850.

0.78 is a round number and provided support various times, including recently. Going deeper, 0.7765 worked as support, and is a line to watch now on the way up.

0.7715 is stronger support after serving holding the pair in December.  0.7680 worked as support in December and that is where the pair stopped in early  January 2015.

Below this point, we are back to levels last seen in 2012: 0.7615 is initial support and the critical line is 0.7460.

Further support is found at 0.7370, followed by the round number of 0.72.

Wide  downtrend channel maintained

As the thick black lines show, the pair is trading within a wide channel that is heading down. The bottom of the channel was tested in December and held up very well.

I am bullish  on  NZD/USD

The kiwi has a good fundamental base: milk is in demand and is less sensible to the global shocks coming from Europe.

Here is our  full coverage of the shock  SNB decision

In our latest podcast we analyze the  SNBomb, do an ECB Preview, discuss US wages, dive into Saudi costs and the look at the Aussie

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Further reading:

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.