Forex Preview: NZD/USD Trends Higher

Posted Friday, March 23, 2018 by
Shain Vernier • 2 min read

The NZD/USD has broken out to the bull and is approaching several levels of topside resistance. This week’s participation has been driven by actions of central bankers. Wednesday announcements from the FED and RBNZ have been instrumental in prompting investors to reevaluate the potential of the Kiwi in the near-term.

Session gains by the New Zealand dollar against the USD have been considerable. At press time, the NZD/USD is up 70 pips and pushing intraday highs. Even though the RBNZ held rates static at 1.75% and the FED raised rates 25 bps, the rally is on.

Amid talks of a coming trade war and turbulence in global equities, the Kiwi appears to be a popular target for risk-averse investors.

NZD/USD Technicals

From a practical standpoint, we are looking at a full-blown trend day up in the NZD/USD. After a hard bounce off of the .7200 handle, bulls are pounding this market north at every turn.

NZD/USD, Daily Chart

Here are the key levels to watch for the remainder of the session:

  • Resistance(1): 20 Day EMA, .7257
  • Resistance(2): Bollinger MP, .7263
  • Resistance(3): Daily SMA, .7270

Overview: In the event that price breaks above topside resistance, the sky’s the limit for the Kiwi. Sunday brings several numbers that may drive price action directionally:

  • Imports/Exports (Feb.)
  • Trade Balance (MoM, YoY) (Feb.)

Today’s close is going to be huge for the NZD/USD. If the current bullish trade is sustained, an opportunity to buy from the Daily SMA will be on the table for Monday’s session. If we see the prevailing trend reach exhaustion in coming hours, then a retracement play to the short will present itself early next week.

Stay tuned for today’s forex and U.S. equities close as there are sure to be fireworks. The big question lies with the institutional money — will they take profits or go home short the USD and indices? We are soon to find out.

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