NZD/USD – Can New Zealand Dollar Hold 100-day SMA Vs US Dollar?

Key Highlights

  • The New Zealand Dollar started a downtrend from the 0.7550-0.7560 area against the US Dollar.
  • There was a break below a crucial bullish trend line with support at 0.7380 on the 4-hours chart of NZD/USD.
  • The Preliminary release of the US GDP for Q2 2017 points an annualized increase of 3%, more than the +2.7% forecast.
  • ANZ Business Confidence in New Zealand for August 2017 declined from 19.4 to 18.3.

NZD/USD Technical Analysis

The New Zealand Dollar after trading as high as 0.7558 made a major top against the US Dollar. The NZD/USD pair is now in a downtrend and eyeing a close below 0.7150 and the 100-day SMA.

NZD/USD Technical Analysis New Zealand Dollar US Dollar

Looking at the daily chart, there is clear major top visible at 0.7558. During the downside move, the pair broke a crucial bullish trend line with support at 0.7380. It even cleared major support levels such as 0.7330 and 0.7240.

Sellers succeeded in breaking the 50% Fib retracement level of the last wave from the 0.6817 low to 0.7558 high. At the moment, the pair is attempting to break and settle below the 0.7150 support and the 100-day SMA.

If it succeeds, it would open the doors for more losses towards 0.7100 and 0.7050. The recent breaks and current sentiment point more losses as long as the pair is below 0.7240. Therefore, there are chances of a break below 100-day SMA for a test of 0.7100.

US GDP and New Zealand Business Confidence

Recently, the US saw the preliminary release of the Gross Domestic Product (Annualized) for Q2 2017 by the US Bureau of Economic Analysis. The forecast was slated for a rise of 2.7% in the GDP compared with the same quarter a year ago.

The actual result was much better, as the GDP increased 3% as per the second estimate, up from the last +2.6%.

US GDP Q2 2017

The report added that:

Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an increase of 2.7 percent (revised) in the first. The price index for gross domestic purchases increased 0.8 percent in the second quarter, compared with an increase of 2.6 percent in the first quarter.

Overall, the result was positive, and helped the greenback in recovering versus the Euro, GBP, AUD and NZD. NZD/USD is likely to struggle in the near term and it could even test the 0.7100 level.

Economic Releases to Watch Today

  • US Personal Income for July 2017 (MoM) – Forecast +0.3%, versus 0.0% previous.
  • US Core Personal Consumption Expenditure for July 2017 (MoM) – Forecast +0.1%, versus +0.1% previous.
  • US Initial Jobless Claims – Forecast 237K, versus 234K previous.
  • US Pending Home Sales for July 2017 (MoM) – Forecast +0.5%, versus +1.5% previous.

Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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