NZD/USD bears going for the reversal as the Kiwi rejected 0.74 handle

NZD/USD is weakening as the US dollar is gaining some traction.
Recent comments made by Chinese spokesman suggest that US-China trade war is not over just yet.

Flavio Tosti Independent Analyst

The NZD/USD is trading at around 0.7359 down 0.22% on Friday as the bears are challenging the 0.7359 level which is Thursday’s opening price.

This week the NZD has re-conquered levels which were not seen since mid-March trading as high as 0.7396 on Friday April 13. However the kiwi is losing some steam as comments on Thursday by Gao Feng, commerce ministry spokesman in China, said that “it would be misleading to say Xi's pledge this week was a concession to the United States. China will not hesitate to fight back if the U.S. escalates the trade spat.”

New-Zealand is a major trade partner with China. This week the NZD was boosted by the easing of tensions in the US-China trade war. On Tuesday, Chinese President Xi Jinping said that he was willing to open up its economy to free trade and lower tariffs to US automakers among others.

The recent news from the US has strengthened the US dollar. The core annualized inflation for March was at 2.1% above the 2% target by the Fed. Additionally, the FOMC minutes were rather hawkish with all members agreeing that it was appropriate to hike rates gradually.

Coming up next on Friday is the speech of the FOMC member Kaplan at 17:00 GMT. Earlier the preliminar readings for the Michigan Consumer Sentiment Index for April came in worst-than-expected as well as the JOLTS Job Openings for February. The data didn’t affect the US dollar in a significant manner.

NZD/USD 4-hour chart

The bears are trying to reverse the current bull trend. Resistance is at the 0.74 figure and swing high, followed by 0.7440 swing high made in mid-February. Looking down, supports lie at 0.7344 swing low and 0.7323 swing high.

Author

Flavio Tosti

Independent Analyst

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