The NZD rallied against its counterparts in the Asian sessions, with some bullish sentiment renewed as Governor Wheeler’s speech was in a positive tone in regards to the New Zealand economy. Wheeler suggested that further NZD depreciation was necessary for overall economic growth. Investors were expecting a further rate cut in the coming months to help the domestic markets, but yesterday’s speech educated market participating that the New Zealand economy was not fragile enough to warrant another cut. This favoured the NZDUSD bulls with an 80 pip hourly candle post speech.

Further looking at the technicals, strong support was formed around the 0.6500 regions back in mid-July. Since then the NZDUSD has gradually inclined breaching numerous levels of minor support. On the daily analysis of the 23rd, it was stated that the NZDUSD was bearish as long as prices could keep below the trend defining level of 0.6750. This was the previous lower high created back in early July.

Against this, NZD bulls have been resilient. Even the influx of good news from the States combined with the events of China have failed to keep bulls down, but to only act as fuel to break levels of identified resistance. Prices currently trade around the 0.668X levels and reside not only above the daily pivot but also the weekly pivot of 0.6590, a level that offered support to the bullish move experienced on Monday.

As for today, the main focus remains the FOMC, which will be released this evening. This can either give the NZDUSD the final jolt needed to breach the 0.6750 trend defining level or simply be the single entity that sends prices back below the 0.6600 level, with a continuation to 0.6430. Support back July 2009. 

A hawkish tone will be expected in tonight’s FOMC report and should enforce USD strength. The array of positive news releases from the States should act as an attribute that may reinforce a positive tone in which the Fed conveys about the outlook of the US.

Focusing back on the technicals, NZDUSD trades at critical levels.

  • Prices are trading above the 20 SMA
  • Prices trade below the monthly pivot but above the weekly pivot
  • The MACD has crossed to the upside

The technical leading and lagging indicators are giving mixed signals. Given this, as long as prices keep below the 0.6750 level, the attributes of a downtrend still holds. The FOMC this evening may pave a clearer path for us to follow.

Intraday – Intraday the NZDUSD is bearish. Prices peaked in the Asian session post-speech with a current decline to the daily pivot. The MACD has crossed to the downside and prices reside below the hourly 20 SMA. An hourly close below 0.6600 should open a path down to 0.6620, the daily S1. If bulls take the lead once more and move prices back to 0.6720, then this intraday bearish view becomes invalidated.

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