NZD/USD finally bottomed around the 0.8400 handle this week before extending upside movement, increasing the price of Kiwi Dollar to more than 0.84850. The sentiment however still remains bullish due to Higher Low and Higher High in the recent waves.
As of this writing, the pair is being traded around 0.8487. A support can be seen around 0.8464, the 200 Daily Simple Moving Average (DSMA) ahead of 0.8400, the swing low of the recent correction wave as demonstrated in the following chart.
On the upside, the pair is likely to face a hurdle near around 0.8504, the 76.4% fib level ahead of 0.8567, the 67.8% fib level and then 0.8618, the confluence of 50% fib level, 100 DSMA and 55 DSMA. The sentiment will remain bullish as far as the 0.8402 support area is intact.
US Industrial Production
The Board of Governors of the Federal Reserve will release the US Industrial Production report today. According to the median projection of various economists, the industrial production remained 0.3% in July as compared to 0.2% in the month before. Generally speaking, higher industrial production is considered positive for the US economy, hence a better than expected actual reading will be seen as bearish for the pair and vice versa.
The Federal Reserve will also release the Capacity Utilization report on Friday (today). According to the average forecast of different analysts, the capacity utilization remained 79.2% in July as compared to 79.1% in the month before. Generally speaking, higher capacity utilization reading is considered positive for the US economy thus a worse than expected actual outcome will be seen as bullish for the pair and vice versa.
Keeping in view the overall technical and fundamental outlook, buying the pair around the current levels appears to be a good strategy in short to medium term as described above.