NZD/USD battles short-sellers to trade above water near 0.7200

Currently, NZD/USD is trading at 0.7206, down -0.30% or (21)-pips on the day, having posted a daily high at 0.7237 and low at 0.7194.

The New Zealand dollar vs. American dollar had a positive week as prices recovered from the 100-DMA near 0.7130. Furthermore, another 'confusing' FOMC minutes left the US dollar vulnerable to short-sellers that wasted no time to reduce long-dollar positions that favor the Kiwi, at least for now. As of writing, the pair has accumulated almost 67-pips from the week's low.

Nevertheless, the New Zealand economy could expect several risks that have the potential to ruin the good spirit the country celebrates. According to market sources, property value could be slashed to clock a 12% cut in the next 36-months. Evidently, higher interest rates become a challenge but according to the RBNZ during the latest monetary policy statement "sometime in late 2019 a rate hike should be expected."

US Dollar leaps to 101.00 post-US data

Historical data available for traders and investors indicates during the last 8-weeks that NZD/USD pair had the best trading day at +1.60% (Jan.17) or 115-pips, and the worst at -1.26% (Jan.18) or 89-pips. Furthermore, the US 10yr treasury yields have traded from 2.38% to 2.31%, down -1.94% on the day at 2.32% or -0.0461.

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 0.7245 (high Feb.23), then at 0.7332 (high Feb.8) and above that at 0.7402 (high Nov. 8). While supports are aligned at 0.7172 (low Feb.23), later at 0.7118 (50-DMA) and below that at 0.7075 (low Jan.16). On the other hand, Stochastic Oscillator (5,3,3) seems to head north. Therefore, there is evidence to expect further Kiwi gains in the near term.

On the long term view, if 0.6888 (low Jan. 2017) is in fact, the bottom for the first semester in 2017, then upside barriers are aligned at 0.7303 (short-term 61.8% Fib), to avoid 'false breakouts,' only an open and close above this level would open doors towards 0.7400 round figure. To the downside, supports are aligned at 0.7096 (short-term 50.0% Fib), then a dense support region between 0.6951 (reverse long-term 38.2% Fib) and 0.6888 (short-term 38.2% Fib).

RBNZ: OCR to stay on hold for some time yet, but the next move is likely to be up - Westpac