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NZDUSD Forex Analysis

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NZDUSD Technical Analysis

Currently, the NZDUSD pair rallies +1.21% near fresh five-day peaks posted at 0.7086 levels. The bid tone around the NZD grew bigger all of a sudden, taking the prices further beyond 0.7050 barrier, in an effort to regain 0.71 barrier. The NZDUSD pair recovers almost a quarter of the RBNZ rate cut expectations-led slump and now looks to accelerate further to the upside largely on the back of a profit-taking rally as markets resort to repositioning ahead of the crucial Fed decision due tomorrow (NZDUSD Forex Analysis).

NZDUSD Forex Analysis 1

NZDUSD Long After Retrace

Ignoring weak trade balance data, the NZDUSD pair staged a remarkable recovery from sub-0.7000 mark and is now comfortably trading above well above the handle, around mid-0.7000s, slightly off session peak level of 0.7063. A broadly weaker US Dollar has been the key factor supporting the pair’s recovery from a multi-week low level touch recently. The pair shrugged-off data showing fall in exports, which further boosts the prospects of RBNZ rate cut in August.

NZDUSD Forex Analysis 2

NZDUSD Forex Analysis Short

The market holds very light short CAD, NZD and NOK positions with scores of -9, -5 and -9 respectively (on a scale of +/- 50), with AUD positioning a small net long of +6. We view such light positioning as complacent and see a risk that FX investors begin to build bearish positions in the commodity bloc. From current levels, momentum above 0.7065 horizontal resistance is likely to get extended beyond 0.7100 handle, towards 0.7120-30 strong resistance.

NZDUSD Forex Analysis 3

NZDUSD Short Entry Levels

More chances for a bearish continuation, what is confirmed by a recent multi time frame price action research, and important level zones NEXT WEBINAR. How to use levels – 1. Wait till the level is reached, 2. Reversal pattern, 3. Confirmation , 4. Entry, 5. Target (intraday) is a last level on the direction mentioned with arrows. Reviewing the most recent PA 1&2 period patterns we have: 1M Bullish Pattern Knowing the patterns of a higher time frame is very important. Sometimes they can conflict one to another, but it gives us the information of the possible correctional moves, or a start of a new direction, so basically, every time when conflict exists, you must examine a chart whether it is a correctional pattern appearance or a new direction (NZDUSD Forex Analysis).

NZDUSD Forex Analysis 4

The New Zealand dollar is up almost as much as the yen (~1.2%) and the Australian dollar (0.8%). The strength of the move is surprising given the fundamental outlook (both central banks are likely to cut interest rates next month) and positioning (speculators in the futures are long, especially the Australian dollar).

First thing tomorrow in Sydney, Australia’s Q2 CPI will be reported. Barring a surprise, the report is seen as the last hurdle to a rate cut next week. And the market is even more convinced of an RBNZ cut later in the month.

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Andrew Pial

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