Kiwi looks decisive to sustain gains

The Dollar came under broad pressure during the London AM session. Market narratives are talking about position trimming into the Fed’s expected rate hike, which is also widely expected to be accompanied with dovish-leaning guidance.

Meanwhile the antipodean currencies saw some buying sentiment, with NZD posting more than 5% gains so far today following the strong business confidence index released overnight.

NZDUSDrecovered nearly 3-day losses, crossing above 20-day SMA and looking ready to form a bullish morning star pattern into today’s closing. The pair remains above 0.6750 level for the 6th consecutive week, suggesting that bulls persist on moving Kiwi higher. In the day chart, the overall picture remains positive, despite mix momentum indicators. RSI is configured positively above neutral zone, reflecting a positive bias, whilst MACD is flattened below signal line, remaining in the negative scenario for the pair with consolidation in the short term.

If the pair sustains today the 0.6850 (20-day SMA and above 200-day SMA), then the next Resistance area to be watched is the area between FE61.8 and the R2, at 0.6910-0.6920. Further gains could lead towards the 0.7000 barrier.

NZDCHFpresents similar action to NZDUSD, as the pair rebounded from December’s lows and is currently up by 75 pips. NZDCHF holds strong Support at the 200-day SMA since November 7, at 0.6740. Meanwhile, the fact that the 50-day SMA is sloping to the upside since October, while 200-day SMA has flattened the past month, could be interpreted as bullish bias in the near future, but with the risk of entering a ranging market in the medium term.

However, as the pair remains within the lower Bollinger Bands pattern in the daily frame, and as technical indicators are mixed, there is not a clear indication to the upside yet. If the pair sustains gains today above yesterday’s peak at 0.6790, therefore the near-term outlook would switch to a positive one, with next Resistance at 0.6875. Support remains at 200-day SMA 0.6740, while immediate one is at 0.6780.

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Andria Pichidi

Market Analyst


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