During the last week we could see a very strong NZD

Good morning from a sunny Hamburg and welcome to our Daily FX Report. U.S. and European leaders agreed on Monday to impose wider sanctions on Russia´s financial, defense and energy sectors. The new sanctions are aimed at increasing the pressure on Russian President Vladimir Putin after the Malaysian airliner was shot over territory held by pro-Russian rebels in eastern Ukraine. However major U.S. banks and securities firms are struggling to comply with new U.S. sanctions, with some on Wall Street complaining that directives are too vaguely worded and leave room for error.

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Market Review – Fundamental Perspective

The U.S. economy failed to rebound as much as investors forecast in the second quarter but the USD increased the most in two weeks against the EUR to $1.3440 yesterday, dropping the most on a closing daily basis since July 14. It touched $1.3422 on July 25, the weakest since November 21. A Labor Department report on August 1 might show nonfarm payrolls increased to 231,000 in July, as the economists expect, which would represent a sixth-straight month with 200,000 or more in job gains for the first time since 1997. Analysts surveyed by Bloomberg News predict the Commerce Department will say tomorrow the U.S. gross domestic product climbed 3 percent in the three months ended June, indicating the fastest pace of growth for the world´s biggest ecnomy since the quarter ended September 2013 and a rebound from a 2.9 percent contraction in January to March of this year. The Bloomberg Dollar Spot Index tumbled 0.4 percent on June 18 after Fed Chair Yellen said the central bank plans to keep its interest-rate target low for a “considerable time” after it ends bond-buying. It bottomed at an almost twomonth low of 1,002.25 on July 1 and is now at 1,013.95.

New Zealand´s dollar dropped to a six-week low to 0.8547 after tumbling to 0.8530, the lowest since June 12. Reserve Bank of New Zealand Governor Graeme Wheeler said on July 24 that the currency´s level is “unjustified and unsustainable”, after signaling a pause following four interst-rate increases this year. Meanwhile in Japan the retail sales fell more than forecasted in June, 0.6 percent from a year earlier. Overall consumer prices rose 3.6 percent in June, reflecting a boost from the 3 percentage point. With this background the USD was little changed at 101.86 yen, while the euro gained 0.1 percent to 136.89 yen.

Daily Technical Analysis

NZD/USD (1 Hour)

During the last week we could see a very strong NZD as the bears took complete control. From it´s high around 0.8697 on July 23, the NZDUSD has been dropping to 0.8545 on July 25. Further losses were stopped and the currency pair is in a sideward movement since then. The support level at 0.8530 seems not to be very stable, especially in anticipation of strong economic data from USA on July 30. The RSI indicates a possible movement downward to the 30-line.

Support & Resistance (1 Hour)