The New Zealand dollar had the kiwi in its hands with the rate decision. Milk prices and the GDP release are closely watched now. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
The RBNZ surprised with a rate cut, and that certainly hurt NZD/USD. While the move had an impact, the weakness of the US dollar and the lack of will from the RBNZ to further reduce rates didn’t make it long lasting.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- GDT Price Index: Tuesday, during the European afternoon. Milk is New Zealand’s key export. The Global Dairy Trade advanced by 1.4% last time after 4 consecutive falls. This bi-weekly publication also rocks the kiwi.
- Current Account: Tuesday, 21:45. New Zealand suffered a big current account deficit of 4.75 billion, more than in previous quarters. We may see a smaller deficit this time.
- GDP: Wednesday, 21:45. The economy has been growing quite nicely in New Zealand, with an impressive +0.9% q/q in Q3. A slightly weaker growth rate is expected in Q4. Despite the late release, this is a significant publication.
NZD/USD Technical Analysis
Kiwi/dollar made a move to the upside, breaking above the ranges mentioned last week.
Technical lines, from top to bottom:
The round level of 0.70 is already in sight. The low of 0.6940 allowed for a temporary bounce.
The round 0.69 level has switched positions to resistance. 0.6860 was a low point as the pair dropped in June 2015.
It is followed by 0.6780 that capped the pair in recent months. The round level of 0.67 that works nicely as support. Another line worth noting is 0.6640, which capped the pair in November.
The post crisis low of 0.6560 is still of importance. Below, the round 0.65 level is of high importance now, serving as support.
Below, we find 0.6415, which cushioned the pair in January, as support. 0.6350 provided support in January 2016.
I am bearish on NZD/USD
The RBNZ is likely to take advantage of its rate decision to talk down the kiwi. This doesn’t mean any imminent rate cut, but perhaps hints of such a move later this year. Together with some USD strength, the direction could be to the downside.
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