Brocker.Org: NZD/USD on the verge of a break out to the downside below 0.6850?


NZD/USD is currently trading at 0.6863 with a high of 0.6892 and a low of 0.6849. 

NZD/USD has seen better days, currently in a steep bearish continuation of the September 2016 peak at 0.7484. The US dollar, however, is a mixed bag at the moment on the back of the US data on Friday as well as direct performances of its counterparts.

Q1 GDP growth rose 0.7% annualised (vs 1.0% expected, but well above the Atlanta Fed’s model prediction of 0.2%). “Almost all the slowdown was attributed to the consumer, adding just 0.2ppts to growth in the quarter after two quarters in a row above trend (adding more than 2ppts in each quarter),” explained analysts at Westpac, adding, “the most notable area of consumer weakness was in autos, where there was a sharp slowing, but given healthy labour market trends that can be looked through.”

Meanwhile, analysts at Brown Brothers Harriman explained, that presently, the dollar appears better understood at the fulcrum. Last week it fell against European currencies and advanced against the dollar bloc and yen.”While this may continue, we suspect robust US data (April auto sales and employment) could spur a return of the dollar as the primary mover.  If this scenario does materialize, the recent weakness of the Australian and Canadian dollars may be seen as leading the move.”  In respect to the bird, within the bearish momentum, it is vulnerable to breaking lower and out of the recent range between 0.6850/00.

NZD/USD 1-3 month:  

The analysts at Westpac suggested that the Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD down towards 0.6900. “The RBNZ’s persistent reminders it is on hold for a long time should also weigh. (19 Apr).”

NZD/USD levels

NZD/USD has broken the critical support level 0.6885 and is testing the 0.6850 range low. Next key support below 0.6700 is down to 0.6675 as the 29th May 2016 high. On a break higher back towards the 0.70 handle, the previous bulls have the 17th April highs of 0.7035 is sight protecting 0.7060/70 and recent high today around the 200-d ema (0.7067). There is a double bottom at 0.7130 as the mid-Feb lows.