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Newzealanddollar

Is the NZDUSD bearish or bullish? The Reserve Bank of New Zealand (RBNZ), showing concern about inflation, made another 50bsp hike during May taking its Official Cash Rate to 2.0%. The hawkish tone and actions of the RBNZ paired with fears the US economy could tip into a recession by the end of the year have helped the NZD regain some composure over the past couple of weeks. The NZDUSD made a significant bounce at around 0.62000 after its descent during the first few weeks of the month. Now, the NZD is showing some sign of weakness as it again attempts to breach the 0.63100 resistance level. During last week, we saw mixed data for the Kiwi dollar. The Business NZ Services Index showed a significant increase of 55.2 versus the previous data of 52.2, which indicates a stronger expansion in the services area. But on the other hand, Westpac Consumer Sentiment recorded the lowest reading ever of 78.7 since the survey began in 1988 which shows pessimism towards economic growth and low consumer confidence. On the daily chart, the Williams Alligator Indicator is showing a strong downtrend signal as the price stays below the green 5-period moving average (alligator’s lips). While the other moving averages, the red 8-period moving average (alligator’s teeth) and the blue 13-period moving average (alligator’s jaw) are separated by a large distance between each other giving us a strong bearish trend signal. However, a staunch support level might appear at the 0.62100 area. Given the fundamental analysis and a strong downtrend signal from the alligator indicator, a possible break out to the downside below the strong support zone may push the pair to the 0.60000 psychological price area.
by BlackBull_Markets
NZD USD - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL OUTLOOK: WEAK BULLISH BASELINE What a head scratcher! The outlook for the NZD has been supportive for the currency on so many fronts. The RBNZ was the first major central bank to really ramp up aggressive policy expectations by setting out a clear hawkish path for higher interest rates and have recently hiked in 50bsp increments and also upgraded their terminal rate projections. Furthermore, the economy has been performing well and the growth outlook remains on a solid footing with no major hiccups expected compared to growth outlook in other major economies like the US, UK and the EU. The country also managed to sign an amended trade agreement with their biggest trade partner China, who has promised to open up more markets for NZ goods. However, despite all the positives in play, the NZD has been mostly rangebound for the past 19 months. There have been very big swings higher and big swings lower, but the currency (at the index level) has not been able to catch any sustainable bullish momentum despite it’s positive outlook. That does make us cautious with the currency, despite many things pointing to upside. POSSIBLE BULLISH SURPRISES Both CFTC and tactical positioning looks very stretched at the moment. With positioning at these stretched levels, some position squaring and mean reversion could trigger some upside in the NZD. As a risk sensitive currency, and catalyst that causes big bouts of risk on sentiment could trigger bullish reactions in the NZD. Positive Covid developments in China (easing restrictions, more fiscal or monetary stimulus, or letting go of the covidzero policy) could trigger bullish reactions in the NZD. POSSIBLE BEARISH SURPRISES Negative Covid developments in China (increasing restrictions or adding additional ones) could trigger bearish reactions in the NZD. As a risk sensitive currency, and catalyst that causes big bouts of risk off sentiment could trigger bearish reactions in the NZD. Since a lot of policy tightening has been priced into STIR markets, any negative catalysts that triggers less hawkish RBNZ expectations (faster deceleration in growth or inflation) could trigger downside for the NZD. BIGGER PICTURE The bigger picture outlook for the NZD remains positive for now, but that is largely dependent on what happens to China as the New Zealand economy is also very dependent on trade with China and Australia. However, we don’t want to ignore the clear rangebound price action exhibited by the currency over the past 19 months. For now, given the positive outlook and stretched short positioning, we would favour short-term upside catalysts over trying to chase the currency lower in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE Hawkish Fed policy remains a key driver for Dollar strength. With headline inflation >8%, the Fed has been pressured to tighten policy aggressively, hiking rates by 75bsp at their June meeting, and continuing with Quantitative Tightening. STIR markets suggests aggressive policy action pricing a terminal rate of >3.8% by 2Q23 which should be a positive input for the US Dollar . Safe haven flows have also supported the USD as it’s usually inversely correlated to the global economy and global trade, appreciating when growth & inflation slows (disinflation) and depreciates when growth & inflation accelerates (reflation). Expectations of a cyclical slowdown, accompanied by multi-decade high inflation and synchronized removal of monetary policy stimulus from major economies has seen investors shun risk assets and even bonds (usually considered a safe haven), and the USD has been a key benefactor of the rush to safety as economic prospects have deteriorated. Even though US bonds are considered safe havens, the current high inflation has seen a strong stock-to-bond correlation and has caused big bond outflows. With bonds not fulfilling its usual save haven role the USD has benefited from the rush to safety. POSSIBLE BULLISH SURPRISES As aggressive Fed policy has been supporting the USD, any incoming data (especially inflation ) that sparks further hike expectations, or additionally any comments from FOMC members that signals even more aggressive policy could trigger bullish reactions in the USD. As the cyclical outlook for the global economy is very bleak, and the USD is considered a safe haven, it means any incoming data that exacerbates fears of recession and triggers a big rush to safety could trigger bullish USD reactions. Further outflows in US bonds means more USD safe haven appeal. So, watching key triggers for further upside in bond yields like rising commodity prices and inflation expectations could also trigger further USD bullish reactions. POSSIBLE BEARISH SURPRISES More recently the USD has reacted more cyclically to incoming data which could suggest markets is shifting from safe haven focus to the rising risks of recession. The worse growth data slows, the higher likelihood of a ‘Fed Put’ in the months ahead. Thus, extremely bad growth data could trigger bearish reactions in the USD despite its safe haven appeal. Tactically the USD is trading at cycle highs, and aggregate CFTC positioning is still close prior highs which acted aslocal tops for the USD. Thus, stretched positioning could make the USD vulnerable to mean reversion in the short-term. With a lot already priced for the Fed, it won’t take much for the Fed to disappoint markets on the dovish side. Thus, any FOMC comments that suggests more concern about the economy than inflation could trigger bearish reactions in the USD BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays aggressive and cyclical concerns put pressure on risk assets. But we do want to be mindful that lots has been priced for the USD, and growth deteriorates, we are expecting that the weigh on the USD if markets start pricing in a higher likelihood of a less hawkish Fed as a result of higher risks of recession. Furthermore, given tactical and CFTC positioning, we would prefer deeper pullbacks for new med-term USD longs, but shortterm catalyst can still offer shorter bearish sentiment trades against the current strong bull trend.
by thunderpips
1
NZDCHF Bullish above 0.6400 but act quickly if Support breaksThe NZDCHF pair has hit our first macro target as illustrated on the long-term (1W time-frame) analysis posted in May: Now that the Support has been tested, we see (current chart on the 1D time-frame) a bullish reaction as the price is rebounding today. As long as the correlation with the 2017 fractal continue to hold, we should see a prolonged rebound towards at least the 0.618 Fibonacci retracement level (which is now a little over 0.64000). The 1D RSI is approaching the 30.00 oversold barrier, further enhancing that perspective. On the other hand, be quick to cut losses and open a counter sell if a candle closes below the 0.60700 Support, as that would most likely be the start of a long-term selling sequence towards the -0.618 Fibonacci extension (a little over 0.57000). -------------------------------------------------------------------------------------------------------- Please like, subscribe and share your ideas and charts with the community! --------------------------------------------------------------------------------------------------------
by TradingShot
2
NZDCAD Buy upon a pull-back, target the 1D MA200The NZDCAD pair has been trading on a Channel Down within a Bearish Megaphone pattern. Right now the price is testing the 1D MA50 (blue trend-line) as a Resistance and is struggling, trading below it since April 13. Both the 1D RSI and the candle action resembles the sequence at the start of the Megaphone, which after one last pull-back upon rejection on the 1D MA50, it rebounded to the Lower Highs. As a result, we will be waiting for one last opportunity to buy near the bottom of the Channel and target its top or the 1D MA200 (orange trend-line) should it come first. -------------------------------------------------------------------------------------------------------- ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** --------------------------------------------------------------------------------------------------------
by TradingShot
6
GBPNZD Emerging Golden Cross targets 1.9830.The GBPNZD pair is close to forming a 1D Golden Cross, which is when the MA50 (blue trend-line) on the 1D time-frame crosses above the MA200 (orange trend-line). That is a technical bullish pattern. As you see on the chart, every time the pair formed a 1D Golden Cross, it traded within a Channel Up pattern and the price rose to the 1.5 Fibonacci extension and then the 2.0. Also the candle action printed a similar formation and they happened to be around the same levels. As a result we expect the price to trade higher within a new Channel Up and target 1.9830 (1.5 Fib) short-term. -------------------------------------------------------------------------------------------------------- ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** --------------------------------------------------------------------------------------------------------
Long
by TradingShot
6
EURNZD Sell opportunityThe EURNZD pair eventually entered its bullish zone as outlined by our last analysis in April: The price is now high enough within the Channel Down to justify a medium-term sell as not only did it come too close to the Lower Highs (top) trend-line but the 1D RSI is on Lower Highs after hitting the overbought level of 70.00. On top of that, a 1D Golden Cross is emerging (when the 1D MA50 crosses above the 1D MA200), which even though it is a technically bullish formation, last time it marked a 2 month bearish sequence. Target: previous Low at 1.5600. -------------------------------------------------------------------------------------------------------- ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** --------------------------------------------------------------------------------------------------------
Short
by TradingShot
1
AUDNZD Very strong long-term Channel UpThe AUDNZD pair has been trading within a Channel Up since the November 19 2021 Low. The price only broke outside this pattern twice but was limited to the -0.236 Fibonacci extension (March 15 2022) and the 0.236 Fibonacci extension (May 04 2022). The 1D MA50 (blue trend-line) has been holding as a Support since March 17. The price is now on the 4th straight red 1D candle following the Channel's recent Higher High and the level to buy is either at the bottom of the pattern (around the 1D MA50) or if the 1D RSI hits its Lower Lows trend-line first. Target: the top of the Channel Up. -------------------------------------------------------------------------------------------------------- ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** --------------------------------------------------------------------------------------------------------
Long
by TradingShot