NZD/USD Heading for the 20 Daily SMA After A Steep Reversal Yesterday
NZD has been very bullish since the beginning of November, with the USD turning bearish on softer FED remarks and markets pricing in numerous rate cuts to come this year. The FED was in line with such forecasts in their last meeting, sending the USD further down, while the NZD benefited from bullish risk sentiment, which sent commodity dollars higher. However, in the last several days we have seen a retreat in this pair, which picked up pace yesterday.
NZD/USD slipped lower yesterday on some renewed USD buying, but also on the weaker-than-expected Chinese economic data, which added up to the selling pressure. As a result, this pair closed at the lowest point yesterday, at around 0.6250, losing around 1% on the day. Over the weekend China’s NBS Manufacturing PMI declined to 49.0 points for December, from 49.4 in the previous month, while market estimates were for a reading of 49.5 points.
Meanwhile, the NBS Non-Manufacturing PMI came in at 50.4 points in December from 50.2 points previously, however, it came below the 50.5 points anticipated. But, the Caixin manufacturing report posted a positive surprise yesterday, ticking higher to 50.8 points from 5-0.7 points previously, while expectations were for a slowdown to 50.4 points. But, that didn’t help improve the sentiment for commodity currencies yesterday, so the decline continued and this pair closed at the bottom for the day.
NZD/USD Daily Chart – Will the 20 SMA Hold As Support?
When this pair was in a long-term bearish trend, moving averages were serving as resistance on the daily chart, but buyers drove the price above them, which converted into support, as this week’s bounce off the 200 SMA (purple) demonstrated. The New Zealand GDP figure issued yesterday was dismal, but this pair maintained its upward momentum.
On the downside, the 0.6220-30 level is the next objective, since it is the 50% midpoint of the same move upward, so a close below this level would offer sellers greater confidence. That comes just below the 20 daily SMA (gray) which has acted as support before, so we are watching that level and might open a long term buy NZD/USD signal if that moving average holds.
NZD/USD Live Chart
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