- NZD/USD is starting out the week in the consolidation of last week’s recovery.
- Short positioning is stretched and needs a cleanout.
- Support is located at 0.6720 and resistance remains located at 0.6860.
NZD/USD is starting out the week in the consolidation of last week’s recovery from the 0.6760 lows is currently trading at 0.6792 having made a high of 0.6799 and a low of 0.6794.
NZD was marginally firmer at 0.6790 after the US data on Friday where US GDP undershot expectations. A buy the rumour sell the fact scenario emerged as the dollar was bid leading up to the release which sent the pair down to the aforementioned lows.
- Global market snapshot: US Q2 GDP rose to highest level since 2014 Q3 – ANZ
However, analysts at ANZ noted that FX markets were little moved ahead of this week’s FOMC meeting: “Nevertheless, it does still signal that US economic data is beginning to turn (relative to expectations), which could challenge the idea of the USD continuing to push higher. At the very least, it suggests the downside for the NZD should be more limited near term.”
Antipodeans at mercy of the greenback
Meanwhile, analysts at Westpac explained that both AUD/USD and NZD/USD have followed the fortunes of the US dollar this year:
“The USD rise since Jan, and recent sideways consolidation, have been mirrored by AUD/USD and NZD/USD. We expect the multi-month trends will run further this year, as US economic data, Fed rate hikes and ongoing trade wars support the defensive USD. Both pairs are locked in recent ranges (0.73-0.75 for AUD/USD, 0.67-0.69 for NZD/USD). Short positioning is stretched and needs a cleanout, suggesting a minor near-term bounce for each remains on the cards. In addition, recent data (AU jobs, NZ inflation) has been supportive.”
NZD/USD levels
Support is located at 0.6720 and resistance remains located at 0.6860. The bird’s recovery attempts are indeed shallow and bulls have not been able to sustain a meaningful bid away from the 10and 21-D SMAs converging around 0.6780. RSI has started to stabilise again in neutral territory but if there is to be a continuation of the bid, a break of 0.6920, the June highs, will come into focus. The 200-month moving average resistance at 0.7009 is the next key level while a break to the downside below the 10 and 21-D SMAs opens 0.6720 and then 0.6680.
Share
