NZD/USD unable to take out key resistance at 0.7030/40, but bulls still in play
|Currently, NZD/USD is trading at 0.7011, down -0.01% on the day, having posted a daily high at 0.7023 and low at 0.7009.
NZD/USD has lost some of its recent flight of late with the dollar bouncing back overnight in what has otherwise been a very unfriendly environment for the greenback. The kiwi was able to garner strength on local factors coupled with a sense that the US economy might not be as on track as markets were pricing in at the start of the year. Analysts at Westpac explained, that the overnight peak of 0.7047 should cap NZD/USD today, given the stabilisation in the US dollar.
- New Zealand Imports fell from previous $4.31B to $4.17B in April
- New Zealand Exports rose from previous $4.65B to $4.75B in April
- New Zealand Trade Balance (MoM) above expectations ($268M) in April: Actual ($578M)
- New Zealand Trade Balance (MoM) came in at $572M, above expectations ($268M) in April
- New Zealand Trade Balance (YoY): $-3.48B (April) vs $-3.67B
The analysts have 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 below 0.6700 by year end. "However," the analysts explained, "local factors are mostly supportive: a strong NZ economy, higher dairy prices, and higher inflation; but the RBNZ less convinced (15 May)."
NZD/USD levels
The 0.7000 level was taken out due to the dollar weakness of late. However, the 17th April highs of 0.7035 ahead of 0.7060/70 were a sticky territory and for the bulls to take control, the 0.7070 level needs to be broken. These are yet again the next major resistance area while the 200-d ema (0.7032) remains a challenge. The double bottom at 0.7130 as the mid-Feb lows could be a strong area of resistance for today. To the downside, 0.6950, 0.6900 and 0.6880, where the 4hr ma's gather along with 0.6840 are the near term supports.
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