Marshall Gittler
Trading Analysis
NZD/USD
The dollar traded mixed against its G10 counterparts during the European morning Thursday. It was higher against GBP, NOK and CHF, in that order, while it was lower against JPY, NZD and SEK. The greenback remained stable vs CAD, AUD and EUR.
The euro was stable during the European morning as investors’ eyes are on the most important event of the day, the ECB meeting and President’s Draghi press conference following the decision. At its September meeting, the ECB announced that it would start buying asset-backed securities (ABS) and covered bonds in effect this month, and that it would announce the details of these programs after its meeting today. EUR/USD is not giving any clear directional impulse and much will depend on what Mr. Draghi will say at the press conference.
The New Zealand dollar gained against the greenback after policy makers in China eased property restrictions amid concerns of a weak economic growth. However, weakening fundamentals like the latest fall in wholesale dairy prices, the declining commodity prices and the possibility of another RBNZ currency intervention are expected to weigh on the currency. With this in mind, I could see kiwi to weaken more in the near future.
NZD/USD advanced after the positive news from China, and break our resistance-turned-into-support line of 0.7860 (S1). The pair declined a bit after finding resistance at the 50-period moving average which seems to provide good resistance to the highs of the price action. Shifting our attention to our momentum studies, the RSI turned down after crossing above its 50-level, while the MACD still in its negative territory crossed above its trigger line. As long as the rate is printing lower lows and lower highs below the trend line and below both the moving averages, I still see a negative short-term picture.
Support: 0.7860 (S1), 0.7740 (S2), 0.7700 (S3).
Resistance: 0.8000 (R1), 0.8080 (R2), 0.8180 (R3).
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