NZD/USD on the Edge

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The New Zealand dollar got two major blows this evening: A big rate cut and a bad Trade Balance. Looking at forex charts, NZD/USD is on the edge of major support line. Breaking it could show the way for deep plunge.

First, RBNZ cut the interest rate by 1.5%! This dramatic cut was more than 1% that was expected. The new Official Cash Rate is now at 3.5%. RBNZ stated that interest rates could go even lower in New Zealand. 

The second blow for the kiwi was the Trade Balance. Early expectations stood at a negative balance of 100 million. But the actual figure was -347M. Also here, it was much worse than expected.

When doing a technical analysis of NZD/USD, we can easily see the support line:

 

NZD/USD Daily Chart

0.5150 is a line that NZD/USD has had a hard time to cross. Also after these shakes, NZD/USD has managed to stay above it.

But how long will it last? With a bad economic outlook and and expectations of more rate cuts, NZD/USD will probably tumble. If this support is breached, it will go down a lot.

The next major economic indicator for the New Zealand dollar is the monthly Building Consents due on Thursday, at 21:45. If it also disappoints, we might see a breach.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.