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NZDUSD - Pressure on the Kiwi Dollar


NZDUSD - Pressure on the Kiwi Dollar

NZDUSD 10 Apr 2019

Historically, NZDUSD had spent mid-2016 to mid-2018 ranging between 0.68 and 0.75 but broke support to the downside in July of 2018, heading to lows of 0.642 on the last day of September last year.  We had not seen these levels since 2015.  Last year’s drop was due to the strengthening USD and a slowdown in the New Zealand economy.

Since then we have seen recovery with higher lows and a Kiwi ranging, this year, between 0.67 and 0.694. 

For a few weeks we have been watching the progress of a pennant of the NZDUSD daily chart and we seem to have broken through the lower trend line, with a pullback over the last three days.  If the pair continue to the downside we will have to break support at 0.672 with the next key levels  at 0.671, 0.668, 0.660, etc.  (As traders it is difficult to ignore the lows of 3 January but, as this was caused by some unusual activity followed by a flash crash of the Yen, we should disregard these candles)

Considering the Fibonacci retracement from the highs of June 2018 to the lows of October 2018, we are currently at the 50% level and price has attempted to break this support, without success, for the last 4 trading days.  Price today is below both the 100 and 200 day moving averages.

Recently the New Zealand economy is showing signs of weakness and business confidence is falling, prompting many to expect a rate cut next month, which will put more pressure on the NZD.  As well, with USD strength and the possibility of a resolution to the US-China trade disputes, we could see a fall to the lows of 2018.  As well, the Kiwi economy is highly dependent on dairy exports  and, with demand becoming questionable in Europe and China, this will not help the NZD.


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