The New Zealand Dollar (NZD) extended upside movement against the US Dollar (USD) on Friday, increasing the price of NZDUSD to more than 1.7560 following the release of some key economic news. The technical bias still remains bearish in the long run due to a Lower Low on the daily chart.
Technical Analysis
As of this writing, the pair is being traded near 0.7552. A hurdle can be seen around 0.7613, the confluence of bearish pin bar, trendline resistance as well as 61.8% fib level as demonstrated in the following chart. A break and daily closing above the 0.7613 could incite renewed buying interest, validating a move towards the 0.7700 handle.
On the downside, the pair is expected to find a support around 0.7509, the lower trendline channel ahead of 0.7447, the 38.2% fib level. The technical bias will remain bearish as long as the 0.7712 resistance area is intact.
New Zealand Building Permits
The building permits in New Zealand remained -3.8% in January as compared to -2.1% in the month before, down beating the average forecast of 3.0%, a government report revealed today. Generally speaking, higher building permits are considered positive for the economy thus a worse than expected actual outcome spurred renewed selling pressure in the price of NZDUSD.
Trade Idea
Considering the overall technical and fundamental outlook, selling the Kiwi dollar around the current levels appears to be a good strategy in short to medium term. The trade should be stopped out at 0.7613 while the target may be 0.7450 with a risk/reward ratio of 1:2. The selling pressure may be increased on a breakout through the rising wedge formation as demonstrated in the above daily chart.
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