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Home ANALYSIS

NZDUSD stretches to new 4-month highs

A.R Chowdhury by A.R Chowdhury
March 23, 2022
Reading Time: 5 mins read
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NZDUSD stretches to new 4-month highs

NZDUSD

NZDUSD on the daily chart

The  NZDUSD 
NZD/USD

The NZD/USD is a commonly offered currency pair representing the New Zealand dollar or Kiwi and US dollar.  The pair is popular for exposure into a commodity currency, i.e. the NZD, which helps capture risk appetite for forex traders. Like its Antipodean counterpart, the Australian Dollar, the NZD/USD is seen as a carry trade, due in part to interest rate differentials which favor the NZD. The NZD is the world’s seventh most liquid pair at the time of writing with the USD being the world’s most traded currency and the NZD being the tenth. What Affects the NZD/USD? The NZD/USD is offered at virtually every retail forex brokerage and is a common pair for traders to have experience with.  The pair moves on investor sentiment and can be much more volatile than other pairs such as the EUR/USD, GBP/USD and others. Given New Zealand is the world’s largest exporter of milk powder, this metric is a key factor when driving the pair. Any sensitivity to milk powder exports is captured via the NZD/USD. Additionally, tourism is a key contributor to the New Zealand economy and as such help move the currency pair.  Other factors of note for the NZD/USD include export volumes to China as well as other important economic data releases from China.  Central banks also play a primary role in the direction of the currency pair with both the US Federal Reserve and the Reserve Bank of New Zealand being closely monitored by investors.  Monetary policy is more than capable of abruptly moving the NZD/USD, which can oscillate much more than other normal pairs.

The NZD/USD is a commonly offered currency pair representing the New Zealand dollar or Kiwi and US dollar.  The pair is popular for exposure into a commodity currency, i.e. the NZD, which helps capture risk appetite for forex traders. Like its Antipodean counterpart, the Australian Dollar, the NZD/USD is seen as a carry trade, due in part to interest rate differentials which favor the NZD. The NZD is the world’s seventh most liquid pair at the time of writing with the USD being the world’s most traded currency and the NZD being the tenth. What Affects the NZD/USD? The NZD/USD is offered at virtually every retail forex brokerage and is a common pair for traders to have experience with.  The pair moves on investor sentiment and can be much more volatile than other pairs such as the EUR/USD, GBP/USD and others. Given New Zealand is the world’s largest exporter of milk powder, this metric is a key factor when driving the pair. Any sensitivity to milk powder exports is captured via the NZD/USD. Additionally, tourism is a key contributor to the New Zealand economy and as such help move the currency pair.  Other factors of note for the NZD/USD include export volumes to China as well as other important economic data releases from China.  Central banks also play a primary role in the direction of the currency pair with both the US Federal Reserve and the Reserve Bank of New Zealand being closely monitored by investors.  Monetary policy is more than capable of abruptly moving the NZD/USD, which can oscillate much more than other normal pairs.
Read this Term
has stretched to a new high. The price reached 0.69879. That move got the pair’s price within 8-9 pips of the 50% midpoint of the move down from the 2021 high and also within 13 pips of the natural resistance target at the 0.7000 level.

The high today is the highest since November 22, 2021. The price is up 6 of the last 7 trading days. Over that time, the pair has moved from 0.67279 to the high today of 0.69879 (260 pips).

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Technically on the daily chart, the price has been able to extend above its 200 day moving average this week . That level comes in at 0.6908. On Monday, the price moved above that moving average line but failed. Yesterday the pair trended higher cracking through the level and racing to the upside.

The move – and close – above the 200 day moving average was the first since November 9. It will remain a risk and bias defining level going forward. Stay above is more bullish. Move below and buyers turned sellers.

As mentioned above, the 50% midpoint at 0.6996 is the next key level to get to and through (and 0.7000). Move above and on the daily chart, and traders will start to look toward the downward sloping trendline that cuts across near 0.7059 as the next target.

Drilling down to the hourly chart below, should resistance hold against the aforementioned levels in the NZDUSD, a move below the high from earlier today at 0.69745 could start to see some more corrective selling (if the price can stay below that level). It’s not the end of the world, but traders do like to see breaks have some run.

Further down, the 38.2% retracement – 50% retracement of the move up from yesterday’s low comes in at the 0.69249 – 0.69397 area.

Break that, and the rising 100 hour moving average currently at 0.6914, would be another key level to get to and through if the sellers are to take more control.

Of note is that the low price from yesterday stalled right at the 100 hour moving average. That should increase the moving average’s importance going forward.

NZDUSD

NZDUSD trades to a new high
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A.R Chowdhury

A.R Chowdhury

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