The New Zealand dollar kept the strong momentum and stood out. REINZ house price index is the major event this week. Here’s an outlook for the events in New Zealand, and an updated technical analysis for NZD/USD
Last week NBNZ Business Confidence Survey plunged to 34.4 from 47.6 reading in the previous month. This decline came following the symposium in Jackson Hole where the financial crisis inEuropewas widely discussed, raising concerns around the globe. However housing consents surged 13.0% in July from 1.0% decrease in the previous month promising a positive long term rise to the housing sector following the earthquake inChristchurch.
NZD/USD daily chart with support and resistance lines on it. Click to enlarge:
- Manufacturing Sales: Wednesday, 22:45. Manufacturing sales values increased by 2.9% in the first quarter. Excluding meat and dairy, manufacturing sales edged up 4.% SNZ claimed the reading was not a result of the February 22 earthquake inChristchurch. The same gian is expected now.
- REINZ HPI: Fri-Tue the REINZ house price index report decreased by a disappointing 0.6% after an uptick of 1.3% in the previous month.
* All times are GMT.
NZD/USD Technical Analysis
The kiwi made an upwards move at the beginning of the week after breaking above the 0.8410 line (mentioned last week).
Technical lines from top to bottom:
We start from a higher peak – 0.8843. It’s closely followed by 0.88 which is also distant resistance.
Below, the previous peak of 0.8675 switched positions to resistance very quickly, and is a strong line now. It is closely followed by 0.8620, which was the lower border of a temporary range. It’s a minor line.
Further support turned resistance is at 0.8580, which already played in both directions during July and capped the upwards move just now. 0.8505 is also a notable point which provided a temporary cushion for the pair.
It is followed by 0.8410 – which switched positions from resistance to support and remains of high importance. 0.8330 was a weak line of resistance and now works as weak support.
0.8275, which worked as support and later as resistance proved to be good as support as well. 0.8240 managed to hold the pair down, and was only temporarily breached.
0.8150, which prevented a deeper fall once again, is a strong support line. The 81 line, followed by 0.8080 also provided resistance in the past, but are now support. once again. This region provided a cushion after the recovery move.
Below, 0.7975 was a long running peak and proved to be relevant once again as the swing low of the big fall. A drop below this line will open the road to 0.7875, followed by 0.7825.
I am neutral on NZD/USD.
While food prices support upwards moves in the kiwi, and so does the local economy, the global headwinds, especially those from Europe, will likely weigh on the pair. The forces are balanced now.
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
- For the Swiss Franc, see the USD/CHF forecast.
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