NZD/USD Technicals – Bearish Pressure Remains despite Stronger Economic Data

Early morning Kiwi was propped up by better Manpower Survey figures and stronger Housing data. However, the rally began to unravel towards midday trade and has subsequently collapsed below the 0.826 support.

2 Hourly Chart

Price is still holding on above the descending trendline, but that provides little comfort for the bulls as price can easily straddle along the trendline to head lower. Instead of relying on the trendline, bulls may want to lean on 0.822 support, failing which, the 0.82 round number and previous swing lows may help to keep price afloat. Stochastic indicator suggest that price may be heading lower with ample space for readings to dip further before entering oversold region. Looking at historical data, price was on route with a straightforward downtrend since 25th Feb, but the early March rally put a stop to it by printing a new swing high around 0.834. However, the failure to breach 0.834 and the subsequent breakdown of the recovery is putting overall bias back to the downside, with current recovery from 0.820 looking tentative and bearish momentum looking to increase should the above mentioned supports get broken.

Daily Chart

Daily chart shows more bearish signals. The forward Kumo is bearish with the early March rally finding resistance just around the underside of the Kumo above.  Though Stochastic readings appears to be bottoming out, current readings are far from recent lows back in Dec, and we shouldn’t be surprised if price managed to break lower in spite of what Stoch is telling us.

Judging by recent market reactions to Central Bank rate decisions, it is highly unlikely that NZD will fall further from RBNZ’s dovish statements. Perhaps only an actual rate cut can bring NZD/USD lower and that likelihood is low as the Kiwi Government has been downplaying the negative impact of higher NZD/USD, preferring to focus on the positive that strong NZD will bring. Nonetheless, RBNZ’s decision will certainly heighten volatility, which can help us understand the inherent bias market is holding onto. Should price dip below 0.82 post RBNZ but recover shortly after, the bias will be towards the upside. The opposite is true as well, a stay of hand for RBNZ may result in short-term bullishness for Kiwi, but if bears remains majority in the market, we can see price climbing down quickly after the rally.

More Links:
AUD/USD – Moves Well Off Support at 1.02
EUR/USD – Rallies Well to Back Above the Key 1.30 Level
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