NZD/USD: the pair is under pressure _24/03/2016

Trading recommendations

Sell ​​by the market. Stop-Loss 0.6790. Take-Profit 0.6650, 0.6610, 0.6585, 0.6525, 0.6490, 0.6410, 0.6370, 0.6260

Buy Stop 0.6810. Stop-Loss 0.6760. Take-Profit 0.6860, 0.6900, 0.7000, 0.7100, 0.7240


Technical analysis

Decrease of the pair NZD / USD continued today. Price found support at 0.6695 (EMA144 on a daily, EMA200, EMA144 on 4-hour chart). Indicators OsMA and Stochastic on the 4-hour and daily charts defected to the sellers. Fixing prices below 0.6695 will create conditions to further reduce the pair NZD / USD in the descending channel on the weekly chart with a lower limit near the level of 0.6200.

Back above the level of 0.6770 could send the pair to 0.6860 levels (23.6% Fibonacci level), 0.7240 (38.2% Fibonacci level), 0.7350 (EMA144 on the weekly chart).

More likely further decline in the pair due to a different orientation of the monetary policy of the central banks of New Zealand and the USA, as well as the risks of a slowing global economy, particularly the Chinese economy.

Support levels: 0.6695, 0.6650, 0.6610, 0.6585, 0.6525, 0.6490, 0.6410, 0.6370, 0.6260

Resistance levels: 0.6770, 0.6860, 0.6900


Overview and Dynamics

New Zealand is the largest exporter of dairy products on the world market, especially in China. On Wednesday, the largest dairy company Fonterra of New Zealand reported an increase in net profit, which was in the past six months, 409 million New Zealand dollars compared to 183 million New Zealand dollars in the previous period. However, this news has not helped the New Zealand dollar. The pair NZD / USD after a slight increase at the beginning of the Asian session, has continued to fall.

In the past in the past week the dairy auction price index for dairy products fell by 2.9%.

Two weeks ago, RBNZ has lowered the interest rate by 0.25% to 2.25%, which led to a sharp drop in the New Zealand dollar over the financial market.

The RBNZ fear further deterioration of the global economic outlook and the decline in inflation expectations in most of New Zealand.

The Fed's decision to keep its key interest rate unchanged at 0.5% and a decrease in the forecast on future rate hikes have mostly worked out by the market.

Characteristically, Philadelphia Fed President Patrick Harker said Tuesday that the positive outlook for the US economy speak in favor of the next increase of short-term interest rates. Moreover, the rate hike is possible in any of the Fed meeting, not excluding April. Harker himself in favor of raising rates more than twice in the US this year.

President of the Federal Reserve Bank of St. Louis James Bullard in an interview with Bloomberg Television, said yesterday that it is likely the April rise in interest rates in the US, if the economic data will continue to match the Fed's forecasts, and there will be no surprises.

Thus, the different directions of the monetary policy of the central banks of the USA and New Zealand, once again comes to the fore in the assessment of the prospects for the pair NZD / USD. It is expected that the key interest rate in New Zealand will be reduced to 1.75% from its current level of 2.25%, and in the course of the RBNZ meetings in June and August.

In this regard, the pressure on the pair NZD / USD will continue to grow in the short and medium term for fixing prices below the level of 0.6695, which passes through the 144-period moving average on the daily chart.