There is something special about the NZD and yes we anticipate a new era and a probable bullish run in the long term projection. Now that the price action broke and closed above the 0.69 regions last week following Yellen’s dovish speech, we expect this pair to gain ground mainly because of two reasons. The continued delay by the Feds to raise interest rates and the second main reason is the continued low interest rates in most G10 economies making this pair the highest yielding when traded. We however remain cautious with the NZD Trade weighted index hovering at 72.85 against the 17 basket currency representing a 3% premium against the Half year projection for this year.
Now let’s look at the charts:
Daily Charts Analysis
From a technical point of view, NZDUSD is expected to correct maybe to the 0.68 or 0.67 regions in the next couple of days. The stochastics are in the overbought areas and the OBV is showing a volume reductions and most important observation is that it is retracing from the resistance line. The reduction in volume as shown by the OBV is supported by the reducing momentum in the stochastics in the overbought areas and therefore a reducing price action.
This week we don’t have crucial news from New Zealand other than tomorrows ANZ Commodity Price in which commodity prices is anticipated to rise from the current 0.4 areas. From the US, we have the all important Fed minutes on Wednesday and later on Friday, Yellen’s speech at the International House in New York. We shall be keen to analysis all the tid bits from her speech as it influence this pair.
4 Hour Chart Analysis
The technicals indicate a clear bearish run in this time frame. There is a reducing momentum from the overbought areas and retracement from the Upper band of the BB supported clearly by the uniform reduction of volume as show by the OBV which in turn affects momentum of the Stochastics. At the moment, the price is hovering around the resistance line with the formation of that two bar reversal bar in the Asian session, if price breach the resistance, then there is a short term bear rally to the 0.67 areas before a resumption of bullish trend.
In the New York session, US factory orders will be released and orders will be projected to reduce to -1.5% from the previous 1.6% and the Labor Market conditions index for last month will be released. These two combinations will provide leads for the USD strength or weakness compared to other currencies, so even though they have a low impact, we shall have to wait to see the stats and use them for projecting this pair direction.
15 Mins Chart Analysis
The Asian session was purely bearish and followed through from Friday’s stochastics closing at the overbought region. This will probably correct this the London session where we expect a continuation of the bearish momentum.
We shall be following today’s US economic data news set to be released at the New York Session and see the effect it will have on this currency pair.