NZD, USD chart reaching towards some big RESISTANCE levels
ROAD AHEAD – NZD/USD chart reaching towards some big RESISTANCE levels
New Zealand dollar (NZD), is having a very good run in Jan 2017, as it climbed from 23 December 2016 low i.e 0.6860 to 0.7312 high which it achieved today after better than expected CPI q/q data, which came 0.4% vs. expected 0.3%. During this run it surged above pre-FED meeting levels i.e 0.7237 on 14th December, 2016. It is a remarkable 6.5% rally from its December low.
Main fuel of this rally was overall dollar weakness after Charismas which was caused by Trump policies uncertainties, New Zealand attractiveness for better yields and a stable economy. But todayís CPI data were hardly any surprise as energy prices were high and NZD was tumbling throughout December. So these CPI data were already priced in this rally. But if market is expecting RBNZ to become more hawkish and mention about increasing OCR rates in 2017 then market is completely wrong.
As energy prices are looking to peak out and NZD was at higher levels throughout January 2017 period and as today report showed that if we remove energy component, prices there were hardly any major change in other CPI components. So Mr. Wheeler would like to see Aprilís CPI report before adopting a hawkish tone. Also US opt out from TPP deal which will also cause some affect on New Zealand economy and its trade, in near future. Again FOMC will meet on 31st Jan, 2017 for its 2 day policy meeting. It is widely expected that they will remain on hold but they will repeat their 3-hike mantra and we are just few days behind from Mr. Trumpís announcement of his TAX PLANS and FISCAL SPENDING policy. That should boost dollar strength in near term and NZD looks very vulnerable to it.
Interestingly NZD/USD chart is reached toward some big resistance levels on weekly and daily charts. It will be much better chart to trade if you are dollar bull, in near future.
These levels are support trend line on daily chart which was broken on 15th November 2016, it will now act as a resistance. Around same level downtrend trend line is also acting as a resistance on weekly chart which is one can draw by joining 6th July 2014 high and 4th September 2016 high. There are another trend line by joining 8/09/2016 high and 8/11/2016 high.
If it will unable to trade above these trend lines and breaches trades below 0.7100 levels and downtrend will be resumed and 0.6860 low will come in to picture. Letís see how thing turn out for NZD/USD charts.