As well-known, the budget of New Zealand highly depends on the prices of the dairy products, as New Zealand is the largest supplier of the dairy. Taking into account high supply and low demand, the increase of export revenues is not expected.
The pair NZD/USD is also under pressure from strengthening in the USD caused by expectations of the increase in the interest rates in the USA. The adherence of the Reserve Bank of New Zealand to the monetary policy easing, which gives a chance to lower interest rates twice before the end of this year, has negative effect on the pair as well. However, the NZD has been supported in the pairs with the AUD and JPY.
On Friday at (01:45 GMT+3), the data on the number of construction permits in New Zealand will become known. At 04:30 (GMT+3) Australian economic news will be released. At 15:30 (GMT+3) the annual data on the US GDP for Q1 will be made public. If the negative forecast for this index proves to be correct, it will put pressure on the USD and provide support the pair NZD/USD.
Support and resistance
In May the pair has lost 400 points. Now, the pair goes down to the support level of ЕМА200 (0.7100). Fundamental and technical factors demonstrate that the pair will reach this level as early as in June, if the US Fed will not make ambiguous statements about the increase in the interest rates in the USA.
Support levels: 0.7315, 0.7385, 0.7450, 0.7545 and 0.7600
Resistance levels: 0.7220 and 0.7200
It is recommended to open short positions at the either current price or from the levels of 0.7250, 0.7265, 0.7290, 0.7330 and 0.7385 with the targets of 0.7220 and 0.7120 and stop-loss of 0.7290. Long positions can be opened if the pair exceeds the level of 0.7385 with the target of 0.7600 (Fibonacci 23.6%).