NZD/USD: bulls looking for next big break
|- NZD/USD has started out the week by closing the opening bearish gap.
- The recent tick-up in core inflation provides some assurance that inflation is on the rise.
NZD/USD has started out the week by closing the opening bearish gap down at 0.6791 and has climbed back to score a high of 0.6820.
NZD/USD has been recovering from the descending support line at 0.6713 and has added a full cent since the recent remarks from Trump in both the CNBC interview on Thursday in NY trade and again on Friday when he tweeted a series of comments that have stoked the trade war fire.
Analysts at ANZ noted that President Trump doubled down on his critical comments of the Fed and the USD subsequently suffered, sending kiwi back over 68 cents. "Domestic developments have taken a back seat for now, with the NZD at the whims of global forces, although it is not like that picture is overly clear at present," the analysts added.
RBNZ will remain on hold, Fed will continue to raise rates
Meanwhile, on the domestic front, the recent tick-up in core inflation provides some assurance that inflation is on the rise, but the analysts at ANZ expect the RBNZ will remain cautious, particularly in light of uncertainty around the persistence of inflation pressures - leaving the bias and advantage towards the dollar on the central bank theme - regardless of what Trump says about the Fed and interest rates.
NZD/USD levels
Support is located at 0.6720 and resistance remains located at 0.6860. Bullishly, the price has overcome 0.6760, where it was previously resisted by the 21-hr SMA. The price then managed to get above the 10-hr SMA and took RSI into overbought conditions. There could be some consolidation and profit taking here. However, on a break of 0.6920, the bulls will be well back in control and could target the June highs. The 200-month moving average resistance at 0.7007 is next key level.
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