NZDUSD Battle For This Level
Ultimately, with the RBNZ stating its intention to devalue the Kiwi Dollar in no uncertain terms, the NZD is unlikely to be making a strong recovery any time soon. However, the potential for an August rate cut has basically been priced in now which should prevent the pair from tumbling further. As a result, the Kiwi Dollar is likely set to remain range bound between the 0.7058 and 0.6952 levels in the short to medium term. This being said, keep a close watch on the FOMC Meeting as it will play its usual role in increasing this pair’s volatility (NZDUSD Technical Analysis).
NZDUSD Long Forex Analysis
Offered tone around NZDUSD ran out of steam as prices neared Thursday’s low of 0.6951 levels, helping the spot recover slightly to 0.6973 levels. The spot was rejected at 50-DMA level of 0.7009 earlier today following which a steady stream of offers push the spot to a session low of 0.6957. The uptick in treasury yields could have strengthened the bid tone around USD (NZDUSD Technical Analysis).
NZDUSD Technical Analysis
New Zealand GDP at 2.4% is currently in an extraordinarily comfortable position inside constructed moving averages in successive order from 1 to 9 years. Averages range from 1.80 to 2.89 Current 2.4 mid point for example is located at 2.34. The last reported 2.4 however sits perfectly on a support/resistance point. Current 2.4 is above the 2, 3 and 4 year averages and below the 1, 5, 6, 7, 8 and 9 year. Despite headwinds between 2.50 to 2.70, all averages beside the 1 one year lack oversold or overbought status as 2.4 trades around the averages. While 1.5 is deeply oversold, 4.27 and 4.73 provide far overbought status.
NZDUSD Bears Still Around
Meanwhile, markets expect RBNZ to cut rates in August and that is ensuring the upticks are met with offers. The spot remains at the mercy of action in the treasury yields ahead of the Wednesday’s Fed rate decision. New Zealand trade balance figures due tomorrow could influence the pair as well. Pair has moved extremely well since my last post (See related ideas). Well done to my signals group who got my full trading plan on this one and we are in a comfortable 350 pip profit.
The NZ data calendar this week is unlikely to disturb the NZD too much. There’s the trade balance (Tue), building permits (Fri) and ANZ business confidence (Fri). The US calendar will be more important, including FOMC, advance Q2 GDP and ECI, and durable goods orders. The Fed is unlikely to explicitly signal that Sep is live but they are sure to sound less rather than more dovish.