The currency pair NZD/USD has slightly regained at the beginning of this week. On Monday, the price has repeatedly tested the level of 0.7555 (moving average line of Bollinger bands) but failed to consolidate above this level. Today, the decline in price continued due to the decision of the Bank of Australia to reduce interest rate from 2.25% to 2.0%. Note also that today, new price index of milk and milk products from the auction Global Dairy Trade will become known. It is expected that the price of milk will go down, which will add pressure on the NZD, as dairy products are the main export item of New Zealand.
Support and resistance
From the technical point of view the pair is traded in the wide upward channel, and is moving currently to its bottom limit, which coincides with the level of 0.7500. Breakdown of this level will enable the price to go further down to 0.7470 and 0.7440. If the level of 0.7500 turns out to be too strong for the “bulls” the price can reverse and go up to 0.7555 and 0.7600.
Technical indicators demonstrate that the decline in price will continue. Bollinger bands are directed downwards. Stochastic lines have also turned downwards.
Support levels: 0.7500, 0.7470 and 0.7440.
Resistance levels: 0.7555, 0.7600 and 0.7625.
In the current situation it is recommended to open short positions with the target of 0.7440 after breakdown of the level of 0.7500. Long positions with the target of 0.7600 are advisable if the price consolidates above the level of 0.7555.