The NZD/USD has increased significantly today, has managed to close the last week gap down and now looks determined to reach fresh new highs as the US dollar index could drop much deeper in the coming days if the US data will disappoint today and if the FED will have a dovish speech tomorrow.
The Kiwi has increased even if the New Zealand Trade Balance has decreased from 348M to 127M in June, has decreased much more compared to the 128M estimate, the surplus has reached the lowest level of the last 3-months, but the Kiwi wasn’t too impressed and has jumped higher on the short term. We’ll have to wait to see how the price will react after the United States will publish the CB Consumer Confidence and the New Home Sales data, the consumer confidence may decrease from 98.0 to 95.6 points, while the New Home Sales indicator could increase from 551K to 560K. Moreover the Flash Services PMI may decrease from 51.4 to 51.2 points, the Richmond Manufacturing Index could increase from -7 to -4 points, the US dollar index has increased aggressively in the last 4 hours, but remains somehow under selling pressure.
The NZD/USD has increased sharply today, but we still need a confirmation that the price will increase again in the coming period, we have to be cautious tomorrow after the FOMC Rate Statement because the fundamental factors could change the price direction if the FED will provide any surprise, however is less likely that the FED will hike the rate tomorrow, personally I don’t see a rate increase at least till September.

The price has jumped again above the 0.7053 static resistance, has climbed also above the lower median line of the major ascending pitchfork, a retest of the broken lower median line (LML) followed by a short increase will attract more buyers on the short term, but as I’ve said we have to wait for confirmation. The rate could increase further because has managed to close the former gap down, the NZD/USD has found strong support much above the 0.6896 major static support, has failed also to retest the sliding parallel line. The correction phase will continue only if the rate will have enough energy to jump above the previous high from 0.7324 level, personally I’m not very optimistic that the rate will jump above the previous highs, because the USD remains a powerful currency even if we’ll have a short decrease.

I’ve added the H4 chart to show you better the short term price action, you can see that the price has become strongly bullish and could reach and retest the upper median line of the descending pitchfork, where we could find temporary resistance, a breakout above this level will lead the price toward the 38.2% retracement level, but a retest followed by a drop below the lower median line (LML) could open the door for more declines again, we’ll have a selling opportunity if the rate will decrease and if will test the confluence area formed at the intersection of the LML with he uml.

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