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NZD/USD Approaching Key Resistance Area

The NZD/USD has been in a bullish correction in February after falling to 0.7176 at the beginning of the year. The current correction can be attributed to a lull in USD-strength across the board, and also the fact that dairy prices have been rising. 

New Zealand is a major exporter of dairy and dairy products, and prices have been falling throughout 2014. In 2015, we have seen only growth so this drag on the kiwi has been lifted so far:

GDT Price Index

(click to enlarge)

The GDT price index above shows bi-weekly percentage growth or decline in dairy and dairy product prices.We can see that 2015 has been a turnaround from 2014. 

Still, dairy prices itself might not be able to help NZD sustain a rally against the USD. Like Glenn Stevens of the RBA, Graeme Wheeler of the RBNZ has complained about how overvalued the kiwi is to the USD. So, we should respect key resistance levels as the NZD/USD extends its current bullish correction.

NZD/USD Daily Chart 
(click to enlarge)

The daily chart above shows that if price moves into the 0.76-0.77 area it will be challenged by the bottom of a previous multi-month consolidation as resistance. The 100- and 50-day SMAs reside here, and there is a falling trendline all showing key resistance here. 

With the prevailing trend still bearish, we should probably look for sellers in the 0.76-0.77 area, especially if the daily RSI also stalls around 60 and turns down. We should probably not expect a break above 0.77 unless there is significant change in the FOMC's stance, specifically if it decides to delay the next rate hike projected to be around mid-2015.