forex

Levels To Watch During A Big Week In The NZD/USD

Posted Monday, May 7, 2018 by
Shain Vernier • 2 min read

The recent sell-off in the NZD/USD has been an ugly sight for traders on the long side. Perhaps the charged news cycle of the next five days will offer some relief. Let’s take a look at the primary market drivers facing the NZD/USD that make up the forthcoming economic calendar:

Event                                                               U.S. Calendar Day

U.S. FED Chair Powell Speech                       Tuesday (afternoon)

U.S. PPI (YoY, April)                                        Wednesday (pre-market)

RBNZ Interest Rate Decision, Presser         Wednesday (evening)

RBNZ Governor Orr Speech                           Wednesday (evening)

U.S. CPI (YoY, April)                                        Thursday (pre-market)

With so many economic events scheduled in such a short time, the NZD/USD may look very different by next Monday’s open. The key news item to be aware of is the RBNZ Interest Rate decision on Wednesday evening. Consensus predictions expect rates to be held steady at 1.75%.

Recent news reports out of New Zealand allude to growing concerns over unethical lending practices. These items stem from investigations in Australia over similar issues surrounding integrity in the banking system. Moves by New Zealand’s regulatory body the Financial Markets Authority are being made to ensure that banks are on the up and up. RBNZ Governor Orr has defended the domestic banking system and will likely extend commentary on the topic during Wednesday’s post-interest rate speech.

NZD/USD Technicals

The sell-off in the Kiwi has been a big one, over 400 pips to the bear. Currently, the psychological level of .7000 has attracted enough buyers to stop the bleeding.

NZD/USD
NZD/USD, Daily Chart

Last Wednesday brought us a brief test beneath the .7000 price point. Since then, the Kiwi has caught some bids. Here are a few levels to watch as this week unfolds:

  • Resistance(1): 20-Day EMA, .7123
  • Resistance(2): 38% of current wave, .7141
  • Resistance(3): Bollinger MP, .7147
  • Support(1): Swing Low, .6984

Overview: In the event that .7000 is protected by bargain hunters, there will be a defined resistance area set up between .7100 and .7150. If the Swing Low of .6984 remains intact, then a short from the 38% resistance level (.7141) is a great way to join the current downtrend.

Be sure to check back as the RBNZ Interest Rate announcements approach. A trade setup should be on the board, likely from topside resistance with the prevailing trend.

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About the author

Shain Vernier is our US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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