New Zealand Dollar Cross Pick 03.21.2011
The rebound in the NZD/USD should taper off ahead of the 20-Day SMA (0.7391) as it maintains the downward trending channel carried over from the previous month, and the kiwi-dollar may revert back towards 0.7100 as the uncertainties surrounding the world economy continues to bear down on market sentiment. As the devastating earthquake in Asia/Pacific dampens the outlook for global trade, the Reserve Bank of New Zealand may adopt a dovish tone for future policy, and the central bank may see scope to lower borrowing costs further as it aims to encourage an export-led recovery. In turn, I will look to fade the rebound in the NZD/USD if we see the exchange rate close below the 10-Day SMA (0.7334) later today, and will look for a test of the 3/17 close at 0.7175, with the stop at 0.7390, the 20-Day SMA.
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