Kiwi Dollar Ready to Climb Higher Still

Key Points:

• 100 day EMA remains highly bullish.

• Rising wedge still in place.

• H4 Parabolic SAR has switch to bullish.

The Kiwi Dollar closed last week slightly higher which was largely a corrective move following the previous Friday’s major slide. However, some stronger NZ fundamentals bookended the week which also helped the pair to shake off the effect of the better than anticipated US GDP data seen on Thursday. As for the coming week, the GDT Price Index is due out and will once again be a point of focus for those following the Kiwi Dollar.

The Kiwi Dollar initially surged strongly higher last week, predominantly as a technical response to the large tumble seen on the Friday prior. However, the solid 4.65B NZ Merchandise Imports figure posted over the weekend also saw buying pressure build as Monday opened. Unfortunately for the pair, this was not to last as the combination of US Fed Member rhetoric and a stronger than anticipated US Final GDP result of 1.4% q/q saw the NZDUSD slide as the week marched on. Selling pressure did finally abate on Friday however, mainly due to the NZ ANZ Business Confidence data posting an uptick to 27.9.

Looking at the technical data now, after being bearish for a few weeks, the long-term bullish trend could resume for the Kiwi Dollar. Primarily, a bullish stint is expected as a result of the pair approaching the downside constraint of the long-term rising wedge structure. However, this reversal could already be underway given the recent switch in the H4 Parabolic SAR reading from bearish to bullish. Additionally, the 100 day EMA shows little sign of slowing just yet which could provide fuel to any potential rally.

As we move forward, the GDT Price Index data will be the primary focus for the Kiwi Dollar but some other figures are also worth keeping an eye on. Namely, the US ADP and official Non-Farm Employment Change results are due out this week which will surely impact the pair heavily. Additionally, stay alert for any upsets in the US Unemployment Rate result.

Ultimately, the long-term bullish bias looks just about ready to make itself felt once again which should encourage the NZD to begin making the move higher. As a result, Fundamentals are likely to have a slightly more muted effect in the coming days but they shouldn’t be ignored entirely, especially not the releases mentioned above. However, also keep in mind that the Kiwi Dollar could seek to test the downside constraint once more before starting its rally in earnest so don’t be surprised if the pair struggles to climb in the early stages of the week.