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Forex – New Zealand Dollar Set To Remain Powerful! How to Trade The Coming Weeks…


Is the New Zealand dollar bucking the trend?

Thank you for joining this forex academy educational video. In this session, we will be taking a look at some technical analysis for the New Zealand dollar.

As many countries in the western world are still in the grip of the Coronavirus pandemic, and with many western countries now seeing a second wave, New Zealand has managed to maintain a low infection rate.
The New Zealand dollar, also known as the kiwi, is a major currency and one of the top currencies traded against the United States dollar.

Other major currencies have seen huge swings against the United States dollar and other currencies. The kiwi has remained one of the best performers.

In this yearly chart, if we go back to the beginning of the year, we can see that the pair topped out around 0.6700 before being sold off heavily in the middle of march, and this was largely attributed to the United States dollar being bought as a safe-haven currency and before the pandemic really began to take hold in the US.

Since then, the New Zealand dollar has climbed up to record highs for the year to a peak in September at 0.6765, and although it is off of that high, a clearly defined line of support can be seen on the chart, and where this support line is moving higher, potentially offering a squeeze back to the resistance line and possibly beyond.
At the time of writing, the exchange rate was 0.6610, and with a high of 0.6765, it represents a fall from the high of only 155 pips.

If we now take a look at the EURUSD pair, we can see that while the NZDUSD pair was peaking at its high, the EURUSD pair was also peaking at a defined area of resistance at 1.1940. It subsequently pulled back to its current low of 1.1647, which may become an official support line if it moves higher, and where this move is -293 pips or almost twice the fall in pip value of the NZDUSD pair. This is another indication that traders believe the kiwi is worth buying.
This was further helped this week by the reserve bank of New Zealand, which stated that it would begin to cut back on its government bond purchases and that the economic activity was rising while the coronavirus was under control.
Safe-haven currencies saw some buying with continual downward pressure on the USDJPY pair last week, which tried to hit the key 104.00 level, and the US dollar also becoming a safe-haven currency, moving to fresh highs of above 94.00 on the DXY index, and yet again this did not cause a huge sell-off in the New Zealand dollar, as it held to the support line.

The week ahead is a monumental one with potentially a change in leadership for the US presidential office, and it is extremely difficult to predict where things might go from here. However, once the dust has settled, the economic indicators favor the New Zealand dollar, and we believe this will become a bid currency.

Forex Market Analysis

Mixed Performance in the Major Pairs

Hot Topics:

  • NZD – Kiwi falls 0.46% waiting for PPI data release.
  • AUD – Making a triangulation expecting RBA Minutes.
  • JPY – Nikkei rises and pull the USDJPY.

Main currencies daily performance.

NZD – Kiwi falls 0.46% waiting for PPI data release.

In the Oceanic Session, the Statistic New Zealand (Stats NZ) will release the Producer Price Index (QoQ). The analyst consensus expects a fall in the PPI input from 1% to 0.3%, and in PPI output from 1% to 0.4%. This PPI forecast is aligned with the last CPI (QoQ) that reached 1.6% in Q4, below the 1.9% registered in Q3.

In the pair NZDUSD, we are observing the minimum recorded in the last session, which coincides with the weekly pivot point (0.73538). If the Kiwi falls below the weekly pivot, we will look for short positions up to the first weekly support level (S1 = 0.72707), which is a potential profit of approximately 80 pips.

AUD – Making a triangulation while expecting RBA Minutes.

Today the minutes of the last meeting of the Board of the Reserve Bank were announced, they decided to keep the interest rate unchanged at 1.50%. The Aussie in the hourly chart is developing a triangulation structure; in case of falling below 0.78912, it could get to drop to 0.77943. On the contrary, if it breaks higher, the objective would be 0.80097.


JPY – Nikkei rises and pull the USDJPY.

In the first session of the week, the Nikkei 225 index rose by 0.48%, and by inverse correlation pulled the USDJPY pair. The decorrelation between both instruments was commented on in our Daily Abstract on February 16th, where we mentioned that “this divergence in the correlation between the Nikkei Index and the USDJPY should be eliminated again” to converge in favour of the major trend of the indexes.

In the short-term, we will maintain long positions if the USDJPY climbs above 106.906 with the objective at 108.26 and a maximum extension at 110.

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