NZD/USD: the decline continues _05/04/2016

Trading recommendations

Sell ​​Stop 0.6750. Stop-Loss 0.6790. Take-Profit 0.6700, 0.6650, 0.6610

Buy Stop 0.6820. Stop-Loss 0.6760. Take-Profit 0.6860, 0.6900, 0.6965, 0.7000, 0.7100, 0.7240


Technical analysis

After the last Friday of strong labor market data in the US and indicators of business activity indexes in production, a gradual acceleration of inflation, consumer confidence in March the US dollar regained in a pair NZD / USD most of the losses incurred.

On Monday, the price has fallen back below the 0.6860 (Fibonacci 23.6% retracement level of the global reduction of the pair from the level 0.8800, which began in July 2014). Earlier, the price has bounced three times on this level - in October and December 2015, in the middle of March 2016.

If the price below 0.6770 (EMA200) reduction pair NZD / USD may continue with the immediate goals 0.6700, 0.6650.

OsMA and Stochastic indicators on the daily and 4-hour chart recommend short positions. On the weekly chart indicators are also moving to the side of sellers and the price is near the upper boundary of the descending channel with the lower boundary, passing near the mark 0.6260 (2015 lows).

The alternative scenario assumes a rise above the level of 0.6860 within the ascending correctional channel on the daily chart with the upper boundary, passing near the mark 0.7000. In this case, the pair may continue to the level of 0.7240 (Fibonacci level of 38.2%), supported by indicators and the fundamental background, which is that - on the side of the sellers.

Support levels: 0.6770, 0.6700, 0.6650

Resistance levels: 0.6860, 0.6900, 0.6965


Overview and Dynamics

Amid fears the central bank to further deterioration of the global economic outlook and inflation expectations in the country in early March, RB New Zealand cut interest rates by 0.25% to 2.25%, however, the statement of the Fed D.Yellen that is necessary slower increase in interest rates, the US dollar collapses in the financial market, including the pair NZD / USD. Efforts to reduce the RBNZ New Zealand Dollar quotations were insufficient. NZD / USD rosed above $ 0.6900 last week.

The most important export sectors of the economy in addition to the timber industry is considered to be agriculture. About 18% of the total export volume of exports of dairy products. At the same time the largest buyer of New Zealand dairy products is China. From this it is clear that the decrease of Chinese imports on the background of a slowdown in China's economy, as well as low international prices for dairy and other agricultural produce, painfully affect the condition of the whole New Zealand economy. The decline in world commodity prices, including dairy products, reduces the flow of export revenue to the state budget. Another negative factor for the country's exporters is the high rate of national currency.

Today, in the aftermath of 14:00 (GMT) is expected to publish an index of prices for dairy products on the auction results prepared by the Global Dairy Trade. The last time the index fell by 2.9%.

If the index will be released today with a reduction, it is logical to assume on a background of falling prices for oil and other commodities, the pair NZD / USD also fell.

Then the attention of market participants will be focused on the publication on Wednesday at 18:00 minutes of the last meeting with the Committee on the Federal Open Market to assess the prospects for further Fed plans on monetary policy in the United States.

The Fed intends to implement further rate hikes this year, but at a slower pace.

From the RBNZ is expected to further decline in interest rates, and in the course of the RBNZ meetings in June and August.

The difference between the Fed and RBNZ monetary policy will be the main fundamental factor in the medium term, exert downward pressure on the pair NZD / USD.