NZD/USD Rate Climbs Above 200-Day SMA for First Time Since November
NZD/USD trades to a fresh yearly high (0.6998) as it retraces the decline from the start of the week, and the exchange rate may continue to appreciate over the remainder of the week as it climbs above the 200-Day SMA (0.6908) for the first time since November.
Looking ahead, it remains to be seen if fresh data prints coming out of the US will sway NZD/USD as the core US Personal Consumption Expenditure (PCE) Price Index, the Federal Reserve’s preferred gauge for inflation, is expected to increase for the sixth consecutive month, while the Non-Farm Payroll (NFP) report is anticipated to show the economy adding 490K jobs in March.
Evidence of persistent inflation along with a further improvement in the labor market may curb the recent advance in NZD/USD as it puts pressure on the Fed to normalize monetary policy at a faster pace, and the exchange rate may face headwinds going into April as Chairman Jerome Powell insists that the committee could “move more aggressively by raising the federal funds rate by more than 25 basis points.”
With that said, speculation for an adjustment in the Fed’s exit strategy may curb the recent advance in NZD/USD, but the exchange rate may continue to trade to fresh yearly highs over the remainder of the week as it climbs above the 200-Day SMA (0.6908) for the first time since November.
NZD/USD Rate Daily Chart
Source: Trading View
NZDUSD initiates a series of higher highs and lows after failing to test the 0.6870 (50% retracement) region, with the exchange rate pushing back into the Fibonacci overlap around 0.6940 (50% expansion) to 0.6990 (23.6% retracement) as it trades to a fresh yearly high (0.6998).
Need a close above the overlap around 0.6940 (50% expansion) to 0.6990 (23.6% retracement) to bring the 0.7070 (61.8% expansion) to 0.7110 (38.2% expansion) area on the radar, with a break above the October high (0.7219) opening up the 0.7260 (78.6% expansion) region.
However, failure to hold above the overlap around 0.6940 (50% expansion) to 0.6990 (23.6% retracement) may push NZD/USD back below the 200-Day SMA (0.6908), with a move below the 0.6870 (50% retracement) region, with the next area of interest coming in around 0.6770 (23.6% expansion) to 0.6810 (38.2% expansion), which largely lines up with channel support.
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.