NZD/USD Forecast June 15-19

The  New Zealand dollar  suffered badly from the RBNZ. Will it further fall?  After we heard the word from the central bank, the focus shifts to quarterly GDP.Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

The RBNZ went for the dovish  scenario and cut the interest rate to 3.25%. It added fuel to the fire by hinting that more cuts are on the cards and also talked down the currency. 0.70 was broken. In the US, data was relatively upbeat, but it hasn’t been as supportive for the dollar  as one would have expected.

[do action=”autoupdate” tag=”NZDUSDUpdate”/]

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

1. GDT Price Index: Tuesday. The bi-weekly Global Trade Index has been on the fall in the past 6 auctions, sliding 4.3% in the most recent one and adding to the pressure on the kiwi. Will we see a bounce now? Milk and everything around it are key exports.
2. Current Account:  Tuesday, 22:45. In the past three quarters, New Zealand suffered deficits in its current accounts. In fact,  Q1 2014 was the exception to the norm with surplus. A one-off  positive figure could be seen for Q1 2015: 0.23 billion.
3. GDP: Wednesday, 22:45. The last time that New Zealand experienced  a contraction in output was way back in Q3 2010. Since then, it has enjoyed ongoing growth. Q4 2014 saw an expansion of 0.8%, as expected. The first quarter of 2015 was probably slower with +0.6%.

NZD/USD  Technical  Analysis

Kiwi/dollar enjoyed some initial  dollar weakness to recover from the lows. But from there, it all went downhill. The initial dip under 70 cents (mentioned last week) was rejected, but this rejection didn’t last too long.

Live chart of NZD/USD:

[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]

Technical lines, from top to bottom:

We start  from lower ground this time.  The very round  number of 0.75 capped the pair just before the big fall and serves as strong resistance. It is followed by 0.7450 that had a role in the past.

The next line is 0.7370, which was a low point in 2011. It is followed by 0.7315, which supported the pair in May.

The recent 2015 low of 0.7235 is  now the next  support line. It is followed by 0.7180 that served as resistance back in 2010.

Lower, the round level of 0.71 used to provide support in the past but was breached now. The new low of 0.7064 now works as resistance.

And of course, the very round level of 0.70 looms large and is still a battle line. It also worked as support.  roles as support.

Below,  the low of 0.6950 is the next immediate support.  If we dig deeper, 0.6850 is  the next line of support after working as such many years ago.

Below these levels, we have only 0.6650, before the round number of 0.65.

I remain  bearish on  NZD/USD

The RBNZ said its word, and there is more room for falls. It could come from the potential for more cuts in New Zealand as well as from the Fed decision coming this week.

In our latest podcast, we  bring you up to speed with the Fed decision and the USD impact, and also  tackle the Greek crisis from two different angles.

Follow us on Stitcher

Further reading:

• For a broad view of all the week’s major events worldwide, read the  USD outlook.
• For EUR/USD, check out  the  Euro to Dollar forecast.
• For the Japanese yen, read the  USD/JPY forecast.
• For GBP/USD  (cable), look into the  British Pound forecast.
• For the Australian dollar (Aussie), check out the  AUD to USD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar forecast.