The New Zealand dollar had a very exciting week, plunging to new lows before leaping back up. Has it finished its falls? Business confidence is the main event. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
Yet again, the central bank hit the kiwi with admission of an intervention, but this time, it was joined by the government. The kiwi almost touched 0.77 (still very far from the goldilocks 0.65 level PM Key wished for) before making an impressive rebound. The 7.3% fall in milk prices weighed, but was not enough. One of the reasons for the rebound was weakness in US data. It is clear that the authorities in New Zealand want a weaker kiwi, but it is unclear if they will get what they wish for from the side of the US dollar.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- NZIER Business Confidence: Monday, 21:00. This important quarterly survey of around 2500 businesses has fallen sharply in Q2, sliding to 32 points, a level last seen in Q2 2013. Another fall is expected for Q3, on the background of worries about growth in China and a slowing housing market.
* All times are GMT.
NZD/USD Technical Analysis
Kiwi/dollar had a horrible start to the week: once it lost the 0.7850 line (mentioned last week), it tumbled down all the way to 0.7706 but rebounded quickly. It gradually climbed and reached 0.7930 before retreating a bit.
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
0.8312 was the low point in August 2014 and it also follows the downtrend support line. The next line is 0.8270, which was the low point in September.
Further below, the round levels of 0.82 is certainly worth watching. It is followed by the initial September low of 0.8120.
0.8075 was one of the cycle lows and now works as resistance. Even lower, 0.8050 provided support for the pair back in February and is the last line before the very round figure of 0.80.
0.7930 was a double top in October’s recovery and is important to watch. It is followed by 0.7850.
0.7825 served as initial resistance in the same recovery. Going deeper, 0.7765 worked as support, and is a line to watch on the way down.
0.7715 is stronger support after serving as a cushion for the pair in September 2013. 0.7685 is very strong support and it held the pair back in the summer of 2013.
Below this point, we are back to levels last seen in 2012: 0.7615 is initial support and the critical line is 0.7460.
I remain neutral on NZD/USD
While the strength of the US dollar seems to be waning and the interest rate differential favors the kiwi, the USD is not beaten yet and neither is the RBNZ. All in all, the forces could remain balanced for another week.
More: Are the AUD and NZD currencies on path for more devaluation?
In our latest podcast, we discuss the big events for October:
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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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