NZD/USD: downside bias towards key supportive 50-d sma

Ross J Burland FXStreet

NZD/USD has caught a bid after the initial sell-off from above the 0.72 handle from a high of 0.7202 and a low of 0.7171.

NZD/USD drifted below the hourly 50 sma at the close of last week's trade with the dollar that managed to keep with a bid despite a drop in yields and a stock market struggling to keep up with the momentum of late at all time record highs across the three benchmarks.

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The bird has been better bid as a whole for the year on the back of a strong NZ economy nd a rise in dairy prices, but February has not ben kind to the currency with a resurgence in the greenback. Data wise, we have seen today's services PMI for January arriving at 59.5 vrs the prior 58.4 While US markets are closed today, analysts at Westpac expect momentum to remain negative with price targeting 0.7130 today.

NZD/USD 1-3 month:

The same analysts are expecting the month ahead to see NZD/USD extending beyond 0.7500 (Sep high) if the US dollar continues to register disappointment in the Trump Administration’s policies. "Further ahead, though, the Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD lower to 0.7000. Granted, the NZ economy is strong and dairy prices have risen, but these forces are subservient to the US dollar’s trend."

NZD/USD levels

The price remains above the 50-d sma at 0.7131 today and there s still some way to go to the downside until the descending resistance line is broken at 0.7000.

1. R3 0.7261
2. R2 0.7244
3. R1 0.7214
PP 0.7197
1. S1 0.7167
2. S2 0.7150
3. S3 0.7121

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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