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The  New Zealand dollar  suffered another week of losses and this time it was certainly due to domestic weakness.  There are two interesting events on the calendar. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

New Zealand’s trade balance surplus squeezed more than expected to 534 million, but this was only the first blow. The influential  ANZ Business Confidence,  that reached a multi-decade peak just in February,  free fell to 53.5 points. In addition, there are worries that the housing market has come to a full halt. In the US, the Q1 contraction doesn’t look good, but the present the future certainly seem brighter.

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

NZDUSD June 2 6 2014 technical analysis fundamental outlook and overview of sentiment for trading New Zealand dollar

  1. Overseas Trade Index: Monday, 22:45. This general indicator provides an insight about the  competitiveness of the economy in international trade. In Q4 2013, a rise of 2.3% was recorded, beating expectations once again. This time, a drop is likely for Q1 2014.
  2. ANZ Commodity Prices: Wednesday, 1:00. As an exporter of  food, commodity prices play an important role. After a drop of 4% in April, a  more moderate drop is expected now.

* All times are GMT.

NZD/USD  Technical  Analysis

Kiwi/dollar  started the week with an attempt to move higher, but it eventually tumbled down. The loss of the  0.85 line (mentioned last week) proved significant, as the pair could not recapture it.

Technical lines, from top to bottom:

We start from lower ground this time. The previous  2014 peak of 0.8745 will be watched on any upside move.  The round number of  0.87  proved its strength during May and joins the chart as key upside resistance.

The older swing high  of  0.8640 worked as a pivotal line but eventually capped the pair. It is followed by  the round number of  0.86, which  worked as a cushion during May 2014.

The low of  0.8550  served as yet another pivotal line in the range. 0.85 is  an important and very round number that looks like a clear separator of ranges.

0.8435  was the peak in September and was retested in January. It was  a strong double top. 0.8392 served as resistance was a recurring peak between November and February.

0.8335  capped a move higher in December and also had a role in the past. The pair fell short of this line in January 2014. Below,  0.8280  supported the pair in February 2014 and also in the past.  0.82, worked as support several times: in September, October and also in December. It is somewhat weaker now.

Downtrend resistance

As the thick black line on the chart shows,  downtrend resistance since reaching a peak in early May. The line could limit any recovery attempts.

I am bearish onNZD/USD

The  RBNZ wants a weaker kiwi  and now this is supported by weaker data coming from  not so convincing milk prices and from housing: two strong areas until recently. With the round trip of business confidence back to the lower levels, the pressure on the kiwi could continue, especially in light of the improving US economy.

More kiwi:  NZDUSD Key Reversal Could Trigger Next Rally Higher

Further reading: