This week trading in the pair NZD/USD was mixed. On Monday, following the release of the negative Chinese trade balance for March, the price fell to two-week lows at the level of 0.7420. However, at this level the price reversed and the NZD won back lost positions. The American currency was under pressure after the release of poor retail sales statistics, which again was below expectations. The growth in index amounted to only 0.2% in March versus expectations of 1.0%.
In addition, the rise in price of NZD/USD was triggered by yesterday’s press-conference by ECB chairman, Mario Draghi. He says that quantitative easing program will continue until steady increase of inflation in Eurozone is achieved. First results of implementation of the QE in Europe will be known on Friday, when consumer price index in Eurozone for March is made public. The rise in the index can trigger weakening in the USD against major counterparts, including the NZD. On Friday, US consumer price index will be also known. It is expected that this index will not change dramatically, remaining at the low level, which will add pressure on the American currency.
Support and resistance
Technically, the price has tested the level of 0.7625 (Fibonacci 23.6%), but failed to consolidate above this level. In the near future the price may try to break down this resistance again, and in case of success, the new targets of the “bulls” will be the levels of 0.7655 and 0.7700.
Technical indicators show upward movement. Bollinger bands are diverging, confirming “bullish” trend. MACD histogram is in the positive zone, its volumes are increasing. Stochastic lines are in the overbought zone; they can go down in the near future.
Support levels: 0.7550 and 0.7500.
Resistance level: 0.7625, 0.7655 and 0.7700.
It is recommended to open long positions after breakdown of the level of 0.7625 with the target of 0.7700. Short positions with the target of 0.7500 are advisable if the price falls below the level of 0.7550.