The NZD/USD trended higher for the better part of last week when market participants preferred to put their money in higher-yielding currencies and shed their holdings of safe havens. At one point the Kiwi even tested the highs it had reached in the beginning of July, touching rates of 0.8057. After several failed attempts to break above these highs, the NZD/USD retreated as sentiment among investors took a hit on Friday and they quickly dumped their long positions in risky assets in favor of more secure ones. The currency pair slipped below its 25-period moving average, but was still able to finish the week with a pretty decent gain. On Monday, however, the selling in the Kiwi intensified and the currency finished the day close to the session lows after starting at the highs. The NZD/USD ended the day around 0.7889 after trading as low as 0.77863. As we approached closer and closer to the support level where the triple bottom formation of late June stands, the bulls started putting pressure on the bears. As a result the NZD/USD tried to bounce back in the early hours of Tuesday, but eventually the bears regained their strength and pushed the Kiwi lower to rates not seen since mid-June. After touching lows of 0.7805 on Tuesday, the New Zealand’s currency tried to finally make a decisive push on the upside and managed to do so. The buying in the NZD/USD started in the afternoon part of the Tuesday session and intensified towards its end when the figures for the New Zealand’s trade balance were announced. Analysts were projecting the trade surplus to contract from 310M to 77M, but instead the latter increased to 331M. This news boosted the New Zealand dollar and even the downward revision of the trade balance figures for the previous month was not able scare the traders, who rushed to buy the currency. Wednesday was a big day for the New Zealand economy in terms of economic data. The Reserve Bank of New Zealand was scheduled to release its official cash rate, which the bank decided to retain at the record low of 2.50%. Moreover, the central bank gave no indications that it intends to lower this rate further at least in the near future. The Kiwi rose on the announcement and on the improved sentiment among investors, who started speculating that the bad data coming for the U.S. economy will prompt the Federal Reserve to use more stimulus measures.
The New Zealand dollar is currently changing hands at 0.7932, just a whisker below the highs for the session. The currency is about to test the resistance levels at the 200-period moving average, which is standing at 0.7938. If we manage to push above them the next obstacle on the way up will be the 50-period moving average, which is standing at 0.7948. Support in the NZD/USD is standing around 0.7854, where the triple bottom of late June is. Oscillators are all trending higher with the relative strength index at 59 and the stochastic already in overbought territory, standing at 92. The MACD is issuing buy signals, which are yet to be confirmed by other technical indicators.
Disclaimer:
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.
