Trading recommendationsSell Stop 0.7095. Stop-Loss 0.7110. Take-Profit 0.7045, 0.7000, 0.6975, 0.6930, 0.6900, 0.6860Buy Stop 0.7140. Stop-Loss 0.7085. Take-Profit 0.7150, 0.7240, 0.7265, 0.7380, 0.7485
Technical analysis Since the beginning of the month amid a general strengthening of US dollar pair NZD/USD is actively reduced. Having broken support levels 0.7265 (EMA144 on the weekly chart), 0.7240 (EMA50 daily chart and Fibonacci level of 38.2% upward correction to the global wave of decrease in pair with the level of 0.8800, which began in July 2014), the NZD/USD downward movement develops. However, NZD/USD pair found support at the 0.7045 support level (EMA200 EMA50 daily and weekly chart). Near this level as the lower boundary of the rising channel on the daily and weekly charts are. The breakdown of this important support level may lead to further bearish movement to the support level 0.6860 (23.6% Fibonacci level). The breakdown of the level 0.6860 may reverse the upward trend.
Indicators OsMA and Stochastic on the daily, weekly charts are on seller’s side, on the monthly chart – also deployed on short positions. On the 4-hour chart indicators are also unfolding in short positions, signaling the end of a short-term upward correction.
The breakdown of current support level 0.7085 (EMA144 on the daily chart) will cause a further decline in the pair NZD/USD 0.7045 with the immediate goal. Consideration of the long positions after the pair may return the pair to the zone above the level of 0.7240. Break of 0.7380 resistance level will increase the risk of further growth of pair within the rising channel on the weekly chart. However, against the background of a different orientation of monetary policy the Fed and RBNZ such a scenario is unlikely. The preference – short positions.
Support levels: 0.7045, 0.6975, 0.6930, 0.6900, 0.6860 Resistance levels: 0.7140, 0.7240, 0.7265, 0.7380, 0.7485
Overview and Dynamics
Strong data from China boosted the inflation rates and the Pacific, including New Zealand dollar. The price index of China’s manufacturers increased on 0.1% in September, marking the first increase in more than four years. The consumer price index rose 0.7%. It is favorable for the New Zealand dollar, as China is the largest trading partner of New Zealand and the New Zealand buyer of agricultural products, especially dairy products. The New Zealand economy is largely export-oriented. About 18% of the total export volume of exports of dairy products. The recent fall in world prices for dairy products (price index for dairy products fell last week by 3.0%) contributed to an additional pressure on the New Zealand currency. Published earlier in the week macroeconomic data point to the stability of the New Zealand economy. The surplus of the state budget of New Zealand was 1.8 billion New Zealand dollars against 414 million New Zealand dollars in the previous fiscal year. Data on consumer confidence have also been positive.
The consumer confidence index in October rose by 1.1% and reached the highest level since mid-2015. Nevertheless, the growing level of confidence and economic growth, as well as the budget surplus will not be canceled, apparently RBNZ Decisions about the next interest rate cut in New Zealand already RBNZ meeting on 9 November. Markets assess the likelihood of a rate cut to 85% from 60% a week earlier. Earlier this week, the country’s central bank confirmed its intention to lower the rate again as early as next month, making it clear that his priority is inflation and inflation expectations. This puts pressure on the New Zealand dollar. Next week will be another auction of dairy products, but no more important data received within the next two weeks.
The pair NZD/USD will generally be influenced by news from the US. And they recently received very positive that he supports the US dollar on the currency market, including in the pair NZD/USD . From the news today forward data from the US. At 12:30 (GMT) will be published by the US unit of inflation indicators for September (retail sales, producer price indices). Also at this time it begins the speech of the Federal Reserve Bank of Boston Eric Rosengren. At 14:00 it will be published index of consumer confidence from the Reuters / Michigan in October (pre-release). However, all the attention of traders will focus on the speech of Fed Chairman Janet Yellen, scheduled for 17.30. If Yellen affect the subject of monetary policy in the United States, the volatility of the US dollar in trade rises sharply in the foreign exchange market. If the speech Janet Yellen will contain signals about interest rate rises in the US before the end of the year, the US dollar strengthened sharply on the currency market.
NZD/USD Weekly Chart