Nick Nasad
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What's Next for NZD/USD After Putting in a 1-Month High

The NZD has been one of the top performers against the USD of late. This week the macro picture was helped by a strong retail sales report along with a jump in its manufacturing PMI. What it leads to is the pricing in of expectations that the RBNZ may be raising rate before long. I talked about the NZD/JPY being ready to push higher earlier in the week, and today, I want to look at the NZD/USD.

Looking at the daily we are coming to an important juncture. If the recent two-week rally by the NZD is for real, we need to see the pair:

  1. Clear the 81 handle which corresponds to the highs from late July (it actually did as I was typing this).
  2. Move past its 200-daily EMA (in gray) which it is in the process of doing.
  3. It then needs needs to hold above those levels.

We would then be looking at the next barriers of resistance along the way, the 0.8160 horizontal level (lows from December 26th and March 13th, along with the 50% fib of the entire downswing from 0.8673 to 0.7684. Will they hold as resistance or just act as a bump along the road. Breaking those levels would open up further upside targets. One fundamental scenario that can see this come to fruition is if the data shows a higher chance of Fed tapering later in the year, which would be a USD negative. 

Other NZD crosses are interesting to monitor as well, including the EUR/NZD and GBP/NZD which tests their own important levels. But the moves have not been as one-sided in those crosses as they have been in the NZD/USD.

- Nick