NZD/USD Technical & Fundamental Outlook | 17 Dec 2013

Usman Ahmed -

Suggestion for Trade: Sell @ 0.8295-0.8300 SL @ 0.8320 Target @0.8112

NZD/USD has been holding a range since last six working days thus making a small triangle formation and is likely to bounce off from upper trendline channel before resuming a downward slide as per technical outlook.

Major Support & Resistance Levels

At the moment of writing the Kiwi-Greenback pair is being traded at 0.8281 during Asian session where it is expected to find an immediate hurdle around 0.8295 (trendline resistance) ahead of 0.8300 (psychological level + 61.8% fib level), and then 0.8441 (76.4% fib level).

On downside, immediate support is seen around 0.8211 (channel support) ahead of 0.8180 (50% fib level) and then 0.8112 (200 DMA), a break and close below this level may push NZD/USD into relatively stronger bearish trend targeting 0.7923-0.7900 support area.

Technical Indicators

MACD is showing negative divergence at hourly timeframe suggesting a bearish reversal might be in play very soon. Relative Strength Index (RSI) is showing neutral readings which means there is a possibility of long movements in near future. 55 MA and 200 MA are at the same point on four hour timeframe which means break of upper trendline resistance may trigger bullish rally in Kiwi pair.

Fundamental Situation

We have some very important economic reports due later in the US session that may increase volatility in NZD/USD, those include:

  • US Consumer Price Index (YoY) Nov: Forecast 1.3%, Previous 1.0%
  • US Consumer Price Index (MoM) Nov: Forecast 0.1%, Previous -0.1%
  • Consumer Price Index Ex Food & Energy (MoM) Nov: Forecast 0.1%, Previous 0.1%
  •  Consumer Price Index Ex Food & Energy (YoY) Nov: Forecast 1.7%, Previous 1.7%
  • NAHB Housing Market Index (Dec): Forecast 55, Previous 54

Better than expected results will be bullish for the US Dollar and vice versa. Not to mention tomorrow is a big day for global financial markets as Federal Open Market Committee (FOMC) members are going to make decision about the future of ongoing asset purchase program.