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    IronFX Essential Intraday Comment | 16/07/2015 NZD/USD

    • The dollar traded mixed against its G10 peers Thursday morning in a day with relatively little economic data. It was higher against EUR, CHF and JPY, in that order, while it was lower against NOK, and AUD. The greenback was virtually unchanged against GBP, NZD, SEK and CAD.

    • NZD came under renewed selling pressure following the weakness of the milk auction results on Wednesday. The decline was further accelerated after the Q2 CPI rate stayed way below the 1% - 3% range target. Even though the yoy rate was in line with market expectations, the overall deteriorating economic conditions are likely to trigger the RBNZ to take further actions at its meeting next week. In addition, the exposure to the soft Chinese and Australian economies, New Zealand’s biggest trading partners, suggests that NZD could fall even further.

    NZD/USD accelerated lower during the Asian morning Thursday, following New Zealand’s weak CPI data for Q2. However, the decline was halted by the psychological barrier of 0.6500 (S1). The pair has been trading within a downside channel since the 23rd of April, and therefore I would consider the outlook to be negative. A clear break below the psychological line of 0.6500 (S1) could carry larger bearish extensions and perhaps target the 0.6430 (S2) zone, marked by the lows of the 19th and 20th of July 2009. The MACD lies well below both its zero and trigger lines, indicating strong downside speed, but the RSI has bottomed within its below-30 territory. Alongside the fact that the pair is trading near the lower line of the channel, this provides evidence that a corrective bounce could be on the cards before the next negative leg. Perhaps to challenge the 0.6620 (R1) territory as a resistance this time. Switching to the daily chart, I see that after breaking below the lower line of a rising wedge formation on the 1st of May, NZD/UZD, accelerated lower. This signaled the continuation of the prevailing long-term downtrend and kept the overall outlook negative.

    • Support: 0.6500 (S1), 0.6430 (S2), 0.6390 (S3)

    • Resistance: 0.6620 (R1), 0.6670 (R2), 0.6745 (R3)


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