The NZD/USD might not be the most obvious pair to monitor the US dollar’s movement against tonight, but there is a good reason why this pair should be watched closely. Some three-and-three-quarter hours after the FOMC’s policy statement and economic projections are released, Statistics New Zealand will publish the nation’s latest growth figure. New Zealand GDP is expected to have expanded at a faster pace of 0.6% q/q in Q4 after a disappointing 0.3% q/q expansion in Q3. We think that a reading above 0.6% should help to maintain the recent short-term bullish price structure on the Kiwi, assuming that the FOMC is not too hawkish beforehand.
Technically, the higher lows that have been created since October suggests the path of least resistance is to the upside for the NZD/USD. The fact that price is holding its own above the 50- and 200-day moving averages are additional bullish indications. However, more recently, the kiwi has put in a few lower highs too, creating a couple of short-term bearish trend lines. Thus, a potential break above these trend lines is needed to re-affirm the bullish bias. The first of the two bearish trend lines converges with resistance around 0.6875. So, a clean break above this level could trigger fresh technical buying towards this year’s high (0.6942) and eventually the next psychologically-important level of 0.7000. However, all bets would be off should the support trend line break down first.
Source: TradingView and FOREX.com