Today, at 01:45 (GMT+3) the data on trade balance in New Zealand became known. This index has unexpectedly improved because of the increase in exports (+4.36 billion NZD versus the forecast of +4.27 billion NZD). Import was below the forecast (4.01 billion NZD versus 4.29 billion NZD).
Nevertheless, the NZD continued to decline after two-day rise earlier. Annual balance remained in deficit of 2.57 billion NZD.
Reduction in trade deficit has become impossible due to the sharp decline in the price dairy products. In addition to the low prices for dairy, the pair NZD/USD is also under pressure from sale of the New Zealand currency in the growing pair AUD/NZD and the difference between monetary policies of RBNZ and the US Fed. Despite the lowering of the interest rate by 25 basis points recently, the RBNZ consider probability of further monetary policy easing.
Today’s news will include US consumer confidence index, which will be released at 17:00 (GMT+3).
Support and resistance
The pair NZD/USD is traded at the 5-year lows at the level of 0.6890 (Fibonacci 50%) after breaking down the line ЕМА200 (0.7100).
Although the pair NZD/USD continues to move in the downtrend and the target remains at the level of 0.6800, in the short-term at the end of the week and the month investors may start to take profit. On the daily chart the indicators OsMA and Stochastic also speak in favor of this scenario (short-term upward correction), as they have reversed towards the long positions.
Support levels: 0.6800, 0.6815 and 0.6850.
Resistance levels: 0.7050, 0.7090, 0.7100, 0.7185, 0.7200, 0.7220 and 0.7275.
It makes sense to open short positions from the levels of 0.7000, 0.7045, 0.7085 and 0.7100 with the targets of 0.6800, 0.6700 and stop-loss at the level of 0.7220. As an alternative scenario it is possible to open long positions after breakdown of the level of 0.7220 with the targets of 0.7300, 0.7340, 0.7450 and 0.7500.