NZD/USD – Key Resistance Above

NZD/USD – Key Resistance Above

NZD/USD – Key Resistance Above

Since dropping to a low of 0.6622 following the FOMC and RBNZ monetary policy meetings, NZD/USD rebounded over 150 pips. The move was driven primarily by profit taking but slightly weaker U.S. GDP numbers also drove the dollar lower. However GDP is backwards looking and the fundamental reason why we are bearish NZD/USD has not changed. The Fed sent a clear signal to the market that they are actively considering a rate hike at year-end while the RBNZ made it clear that they are not happy with the level of the currency. If NZD strengthens further, the RBNZ could lower interest rates again. Next week will play a big role in the future path of NZD/USD. For New Zealand we have the global dairy trade auction – if prices fall, NZD will crash. For the U.S., we have non-farm payrolls – an improvement needs to be seen for the market to believe that the Fed will realistically move forward with their rate hike plans.

Technically NZD/USD is trapped between 2 important levels. Above we have the 50% Fibonacci retracement of the 2009 to 2011 rally at 0.6875. Below we have the 100-day SMA at 0.66 cents.

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