NZD/USD: the pair is under correction after yesterday's growth

19 March, 2015

Current trend
NZD/USD has been highly volatile his week.  Quotes dropped to a level of 0.7274 on Tuesday once the information on an 8.8% decrease in dairy prices was published.  However, the price increased sharply on Wednesday having reached a 2-week high at 0.7547. The increase was due to FED's meeting where the outlook for US GDP growth for a few next years was downgraded. Thus, it may amount to 2,3%-2,7%  instead of 2,5%-3,0% in 2015-2016. Besides, the NZ currency was supported with positive data on NZ GDP over the fourth quarter 2014. The month-on-month and year-on-year increase amounted to 0,8% and 3.5%, respectively, which was better than expected. 

Support and resistance
From technical point of view, the pair is trading within an upward channel. The price has reached its upper border and started a correction that is going on at the present time. A level of 0.7380 (middle line of Bollinger bands) seems to be bears' key target. Once it's broken down, the price may drop to the lower border of the channel to about 0.7325-0.7300. If not, a level of 0.7600 may become bulls' new goal. The rest of indicators are producing opposite signals. The MACD histogram is in the negative zone and its volumes are stable. Stochastic lines reversed downwards.

Support levels: 0.7380, 0.7325, 0.7300.
Resistance levels: 0.7450, 0.7547, 0.7600.

Trading tips
Short positions with a target of 0.7300 should be opened in case the price breaks a level of 0.7380. Long positions may be opened after the price breaks a level of 0.7450. The first target of such positions would be a level of 0.7547, the second target — 0.7600.

Dmitriy Zolotov
Analyst at LiteForex Investments Limited

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