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The  New Zealand dollar  was unable to hold its ground as Brexit fears and milk priced weighed on it. Two events await the kiwi in the upcoming week.  Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

While business confidence rebounded back to 19 points, milk prices slipped by 0.4% and this hurt the kiwi. In the US, data was looking OK. The main theme in markets remains Brexit, and the second big fallout, as the event hits the economy, is casting a dark shadow on markets. The NZD is a risk currency and thus suffered. However, things changed as the RBNZ is not in any kind of rush to  cut rates. Macro-prudential tools are the preferred means of action.

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

NZDUSD technical chart July 11 15 2016

  1. FPI: Tuesday, 22:45. The Food Price Index is important as New Zealand relies on agricultural, soft commodities. Prices slipped by 0.5% in May and may have  struggled also in June.
  2. Business NZ Manufacturing Index:  Wednesday, 22:30. This PMI-like indicator showed a robust industry, with a score  of 57.1 points, well in growth territory. A small slide could be seen now.

NZD/USD  Technical  Analysis

Kiwi/dollar  began the week with a climb but got stuck at 0.7240. From there it began slipping but held above the previous double-top of 0.7050.

Technical lines, from top to bottom:

We begin from higher ground this time.the round number of 0.74 served as resistance and support back in 2015. 0.7305 is the high of 2016 so far.

0.7290 was the pre-Brexit peak and serves as high resistance. The next line is 0.7240 which capped the pair in July 2016.

0.7160 worked as  support when the kiwi was trading on much higher ground in 2014.  0.7050 was the high in  April 2015.

The round level of 0.70 is still important because of its roundness but it isn’t really strong.  The low of 0.6940 allowed for a temporary bounce.

The round 0.69 level has  switched positions to resistance. 0.6840 capped the pair during May 2016 and tops the range. 0.6720 is the low seen in May 2016 more than once providing the lower bound.

The  round level of 0.67 that works nicely as support.  Another line worth noting is 0.6640, which capped the pair in November.

I turn bullish    on  NZD/USD

The RBNZ is in no rush to  cut rates:  the  rising housing prices and a generally strong economy will keep the central bank on hold. In the US, nothing is set to rock the boat for now.

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