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Many important events await forex traders this week with NBNZ Business Confidence, the rate decision and Building consents. Here’s an  outlook  for the events in New  Zealand, and an updated technical analysis for NZD/USD

Last weekNew Zealand’s quarterly consumer price index rose beyond expectations by 1.0% after gaining 0.8% in the first quarter of2011. Inlight of the ongoing inflation, the Reserve Bank ofNew Zealand may have to raise rates within 2011. Will this trend continue?

NZD/USD  daily chart with support and resistance lines on it. Click to enlarge:NZD USD Chart July 25 29 2011

  1. Trade Balance: Monday, 22:45. New Zealand’s trade balance surplus narrowed considerably from $1148 million in April to $605 million in May and was lower than the 1000 million anticipated amid growing imports and a sharp drop in diary, meat and wood export. A further decrease in surplus to $404 million is expected.
  2. NBNZ Business Confidence: Wednesday, 1:00.New Zealand’s business confidence increased in June to 46.5 from37.8 in April with more businesses expecting improvement in the market.
  3. Rate decision: Wednesday, 21:00. The Reserve Bank of New Zealand maintained its interest rate at 2.50% announcing rates will rise within two years and noted the pickup in New Zealand’s economy. Official Cash Rate is expected to remain unchanged.
  4. Building Consents: Thursday, 22:45. New Zealand building consents grew for a third straight month in May, helped by early efforts to supply temporary housing to Christchurch residents displaced by the earthquakes. A similar number is expected now.

* All times are GMT.

NZD/USD  Technical  Analysis

The New Zealand dollar kicked off the week with slow range trading under the 0.8505 line (discussed  last week). After it broke to new highs, 0.8580 worked as a resistance line, and later as a support line in a quick move. The fresh float era record was set at 0.8675.

Technical levels from top to bottom:

Yet again, we have a new record high which is the next final frontier in charted territory: 0.8675. Clear support is at 0.8580, which wasn’t on the charts last week, but managed to play in both directions now.

The previous high of 0.8505 is another clear line of support, also switching roles. It is followed by 0.8410 – a minor pivotal line.

Next we find 0.8380, which is already a stronger line separating ranges.  0.83 became more distinctive three weeks ago, by separating ranges (like the previous line), and remains of high importance.

0.8240 proved to be an important line of support in the past two weeks or so.  The 81 line, followed by 0.8080 also provided resistance in the past, but is now support. once again. Although it is weaker now, it can be tested if the pair falls below the aforementioned 0.8240..

The previous post crisis high of 0.7975 remains an important line, remaining very distinctive, separating ranges. The importance of this line was seen as the pair bounced off it.

I remain bullish on NZD/USD.

The situation in New Zealand is great. The economy is growing fast and isn’t suffering from the Chinese slowdown, at least for now. The positive resolution in Europe gave a boost to the kiwi, and will continue to have indirect influence upon it.

Here is why  NZD/USD should get more attention.

Further reading: