The NZD/USD’s strong showing of late has come to an end – at least for the time being. The unit is in the process of creating a bearish engulfing candle on its daily chart after it ran into offers around its bearish trend line, just below the 0.7400 handle. If support at 0.7350 breaks down now, then we may see the kiwi drop to the next potential line of defence at 0.7320/5, which was formerly resistance. The next level of support below here is at 0.7280/5, which marks the head of the doji daily candle and the 50-day moving average. The more significant support is at 0.7180/0.7200 area, where price has repeatedly found support from in recent times. In addition, the 200-day moving average also comes into play there.
But overall the trend is bullish. So, if and when the NZD/USD goes back higher and eventually breaks the bearish trend line and resistance at around 0.7400 then the next stop for the kiwi could be either at the 0.7460 resistance level or the 2017 high of 0.7555/60.
Meanwhile in terms of fundamentals, there are a couple of key economic pointers from both the US and New Zealand to consider next week. Monday will see the release of US retail sales while New Zealand CPI will be published late in the day on Wednesday or early morning NZ time. These figures have the potential to move the markets, especially if they deviate from expectations meaningfully.
Source: eSignal and FOREX.com