After RBNZ’s surprisingly hawkish statement yesterday, Kiwi dollar has been climbing steadily, ignoring the depressing news from Europe (German IFO sentiment survey) and US (Durable Goods Orders) along the way. Price in fact managed to rally even further, breaking the recent swing high on 19th April.
Price is currently under the 0.855 resistance, the lows of April 12 (not shown on chart). However it is important to point out that that is the only relevance 0.855 has, and hence it may be a tall order for this level to act as a strong resistance. With Stochastic readings currently within Overbought region and heading lower, 0.855 may be a good interim resistance but most likely unable to keep bulls at bay should current bullish momentum continues.
From the daily chart, price is sitting on 0.853 resistance/support. Similarly to 0.855, there is only one point of relevance and it may be a flimsy reason for bears to sell into. Stochastic readings is on the bulls side for Daily Chart, with readings bouncing off the Oversold region and readings pointing firmly higher. This bull cycle as indicated by Stochastic is in line with a bounce from 0.838 support, and should price break 0.853 convincingly (which incidentally is the last vestige of the 50 pip resistance zone starting from 0.848), we could see bullish acceleration towards 0.868 and opens up possibility of even higher highs for 2013. If price manage to close higher from here, a Three White Soldiers pattern will be formed and it will also increase confidence of current bullish cycle.
Perhaps even Wheeler would not have expected that his statements would have pushed NZD/USD so strongly. When Wheeler mentioned that rates would be kept at current level until the end of 2013, he was surely meaning that no rate hikes will come. However, the market flip it around and interpreted it as no rate cuts will be possible. Will Wheeler change his tone again once more should NZD/USD push even higher? That may be possible given his flip floppy record, but by the time he change his tune, the bulls will have 1 full month of rally to contend with. Unfortunately for him, it seems that the 10% overvaluation of NZD/USD given by IMF may not improve anytime soon.