NZD/USD is in a strong uptrend in the short-term and the long-term but it appears that the latest leg of the rally could come to a halt, as the pair is currently testing a key resistance zone. As you can see from the daily chart, NZD/USD already climbed up to the top of the ascending trend channel connecting the highs and lows of the price.
If this area holds as resistance this week, NZD/USD might make its way back to the bottom of the channel around .7900 or until the middle at the .8200 major psychological support. There is also an area of interest in that level since price consolidated there from October 2013 to March 2014.
This could depend on how the RBNZ interest rate decision turns out. Recall that the New Zealand central bank decided to hike interest rates in their previous monetary policy statement, resulting to strong demand for the New Zealand dollar. However, NZD/USD had trouble sustaining its rallies a few instances earlier this month when concerns popped up regarding the country’s dairy exports.
NZD/USD Technical Analysis
Traders are waiting for clues from fundamentals to see how high or low this pair could go. An upbeat RBNZ interest rate decision, even if the central bank decides against hiking rates again, could still lead to decent gains for the NZD/USD pair and perhaps an upside break from the channel resistance.
On the other hand, a downbeat RBNZ interest rate statement with jawboning of the Kiwi could lead to massive losses for NZD/USD. Bear in mind that high exchange rate levels have always been a concern for the RBNZ, as further Kiwi appreciation could wind up hurting the country’s export industry.
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