5:00 PM (EST) Update
Forex NZD/USD Daily: Under pressure below the Ichimoku cloud
The New Zealand dollar – US dollar pair (NZD/USD) finally reached our long-term bearish target and the key support level of 0.73 and broke below the next support level at 0.7245. Remaining below the Ichimoku cloud with the Tenkan and Kijun lines heading down an the RSI also below the neutrality area, we could expect further drops targeting 0.6790 which is a 5-year low.
The market corrected its declines with a sharp rally on Monday, followed by an indecisive spinning top candlestick pattern. The next candlestick could be a decisive signal for market direction.
Unlike New Zealand’s housing market which could be facing a bubble, their dairy industry has been unable to recover . Dairy products account for roughly 1/3rd of New Zealand’s export activity which contributes to 30% of their overall economic growth.
RBNZ Governor Wheeler has repeatedly mentioned that another year of falling dairy prices would be a huge concern for the economy so policymakers might consider adding a fresh stimulus (i.e. cut interest rates.)
An interest rate cut could bring Mr. Kiwi down on the forex dance floor, versus his major counterparts.
For NZD/USD pair in particular, the surging US dollar could make the down move even harder.
Stay tuned for RBNZ cash rate statement on Wednesday at 10 PM GMT!!
Bearish below 0.7245 targeting 0.6790 and 0.6060 in extension
Suggested stops and limits:
|Support Levels||Turning Point||Resistance Levels|
*Important Note: The support and resistance levels are not suitable for all traders and largely depend on your account size, margin and leverage. Book a private lesson to learn how to personalize your account based on our trading guide.