New Zealand Dollar at Clear Risk of Further Losses30 April, 2015 by Aayush Jindal in Fundamental Analysis, Market Analysis, NZDUSD, Technical Analysis
- New Zealand traded sharply lower against the US dollar, despite the latter one weakening against other currencies.
- RBNZ Interest Rate Decision announced by the Reserve Bank of New Zealand was a major risk event, which failed to help the Kiwi Dollar.
- NZDUSD Dived and traded below an important support area of 0.7650.
Earlier during the Asian session, the RBNZ Interest Rate Decision was announced by the Reserve Bank of New Zealand. The forecast was of no change in the interest rates, and the result was as expected. The RBNZ kept the OCR unchanged at 3.50%. However, after looking at the RBNZ statement, it looks like the central bank is not considering any rate hike in the near future, which came as a major setback. Alternatively, there is a chance of a rate cut if the situation demands in the upcoming meetings. The NZDUSD pair traded lower and broke a critical support after the release.
There was one more event lined up, as the New Zealand Building Permits report highlighting the number of permits for new construction projects was released by the Statistics New Zealand. The outcome was above the expectation, as the New Zealand Building Permits increased by 11% in March 2015, compared to the preceding month.
Commenting on the report, the business indicators manager, Neil Kelly, stated that “Townhouses, units, and retirement villages have driven the increase in new dwelling consents over the past year”.
As mentioned the NZDUSD pair moved lower after the RBNZ statement release, and cleared an important bullish trend line on the hourly chart. The pair traded a touch below the 0.7600 support area before finding buyers. However, it is now trading below the 100 and 200 hourly simple moving averages, which is a negative sign in the short term.
If the pair corrects higher from the current levels, then the 100 SMA might act as a barrier. However, the most important resistance can be seen around the broken trend line, which is around the 50% fib retracement level of the drop from the 0.7743 high to 0.7592 low.
On the downside, a break below the recent low of 0.7592 might take NZDUSD towards the 0.7550 level.