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The  New Zealand dollar  showed some relative strength in the last days of 2014 but collapsed as 2015 entered. What will we see from the kiwi in 2015? The first full week of the year sees an update on milk prices as well as other figures.  Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

While the US dollar managed to strengthen against some currencies in the turn of the year, it was not that lucky against the New Zealand dollar. The kiwi managed to recover some of the losses seen earlier, on the background of no economic releases. However, the first full trading day of 2015 saw a surge in the greenback that eventually left the kiwi under 0.77.

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

NZDUSD January 5 9 2015 technical analysis fundamental outlook sentiment New Zealand dollar trading

  1. GDT Price Index: Tuesday. The price of milk is the No. 1 export of New Zealand, making this bi-weekly Global Dairy Trade Price Index critical. The last auction resulted in a price rise of 2.4% and this time could see a drop.
  2. ANZ Commodity Prices: Wednesday, 00:00. Milk is only one of the commodities that the small island nation exports, making this wider measure released by the  Australia and New Zealand Banking Group of some importance as well. Prices have fallen for 8 consecutive months, and no respite is on the cards now.
  3. Building Consents: Thursday, 21:45. The number of building approvals  provides a good indication  for the housing market, despite the volatility. After a drop of 11.9% in  September, we  had a  bounce of 8.8% in October. A slide could be seen now.

* All times are GMT.

NZD/USD  Technical  Analysis

Kiwi/dollar began the week on the lows  clinging onto the 0.7715 line (mentioned last week). It then enjoyed a nice rise, eventually pausing only at the 0.7850 level. From there it was all downhill, and the pair found support at 0.7680.

Live chart of NZD/USD:

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Technical lines, from top to bottom:

We start from lower ground this time. 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 bearish  on  NZD/USD

After the rise on low  volume, the pair could correct back down.  The pressure on commodity prices could be seen via the milk auction. Even  though the New Zealand economy is doing well,  the strength of the greenback could make a comeback.

In this week’s podcast, we offer a preview for 2015:  the Fed hike, EZ QE, slippery oil, UK politics, Big in Japan, AUD down under, Loonie blues and Gold

Further reading: