The New Zealand dollar enjoyed a positive week, riding on the weakness of the US dollar among other things. The main event awaiting us now is the release of the trade balance. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
The economy in New Zealand grew by 0.8% in Q4 2014, exactly as expected. This showed the economy has a good footing and more than balanced the fall in milk prices (8.8%) after a long winning streak. In the US, the Fed sounded a more dovish tone, and the greenback fell.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily chart with support and resistance lines on it. Click to enlarge:
- Westpac Consumer Sentiment: Sunday, 21:00. Very early in the week, this quarterly measure from the Westpac Banking Corporation could set the initial tone. In Q3, sentiment slid from 116.7 to 114.8 points. Despite the drop, this still reflects optimism. A similar number is likely now.
- Trade Balance: Tuesday, 21:45. New Zealand returned to a surplus in January, with +56 million. The positive number is expected to grow to 355 million for the month of February.
* All times are GMT.
NZD/USD Technical Analysis
Kiwi/dollar started off the week in range, falling a bit. An initial surge was followed with a slide to support at 0.7370 (discussed last week). A second rally followed, with a challenge of high resistance at 0.7585.
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
0.7715 was 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 now works as resistance after providing support during January 2015. It is followed closely by 0.7585 which capped the pair on an initial recovery attempt.
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 0.7325, which capped the pair in the middle of 2010.
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.
The swing low of 0.71 in 2011 provides further support before the very round number of 0.70.
Below this round number, we have 0.6950 and 0.6810.
I remain neutral on NZD/USD
The New Zealand economy is doing well as GDP showed once again, and the RBNZ certainly acknowledged it. This certainly boosted the kiwi and added fuel to the dollar sell off fire. However, the greenback could make a comeback and the pair could consolidate the gains before moving higher.
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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.
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