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  • NZD/USD is tracking the Aussie which has remained resilient in the face of US trade policy and the uncertainty that continues to dominate as market participants assess the latest developments in the U.S.-China trade dispute and ongoing NAFTA negotiations.
  • NZD/USD is currently trading at 0.6568, down from 0.6608 but off the 0.6561 lows.  

NZD/USD trades in a 50 pip ATR 14 between the 21-D SMA and 10-D SMA with higher highs and lows on two daily sticks, with rallies capped by the descending  trend line. The greenback has been under pressure of late due to lower inflation readings and key misses in various data that threw the prospects of a December hike into the air.

The table about to turn for the dollar?

However, the tables may well be turning as we head into the FOMC next week while Central Banks elsewhere  are left behind, bring the divergence trade back to the table. The DXY has found a base down at 93.107 (50% fib) on the weekly sticks and then 94.02 (38.2%  fibo) on the weekly. However, on the same sticks, the candles are bearish – bulls need a break above the 21-D SMA at 95.00 in the first instance to negate the downside pressure which should knock EM-FX, the CHN and antipodeans down a few pegs.  

As for Kiwi data today, analysts at TD Securities explained that for the Q2 current account we look for exports to lift by +4.2%/q and imports to rise by +2%/q, for a trade surplus of +$NZ1b. Exports of dairy, meat and fruit all expanded in the quarter. After accounting for a wide  invisibles  deficit, the current account deficit is expected to be -$NZ1.3b, or -3% of GDP (mkt  -$NZ1.3% and 2.9%). We will also look for confirmation that net exports add around + ¼%pt to Q2 GDP growth (released  tomorrow).”

NZD/USD levels

The 21-D SMA caps for now but a broke there opens 0.6685 1st July lows. However, 0.6711 would be the 76.4% retracement of the daily downtrend from 0.7393. The next target would be the 61.8% retracement target of the same sell-off at 0.6841 (this falls in line with the lows of 15th May). A continuation of the downside and break of 0.6500 would open up 0.6344 and 0.6306 on the wide.  

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