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The New Zealand Dollar is the top performer against the US Dollar this week with NZD/USD rallying nearly 2% ahead of the close on Friday. The advance takes price into a resistance range we’ve been tracking for days now and the focus is on the monthly close for guidance. These are the updated targets and invalidation levels that matter on the NZD/USD charts heading into July. Review this week’s Strategy Webinar for an in-depth breakdown of this Kiwi setup and more.

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Kiwi Price Chart - NZD/USD Daily

Kiwi Price Chart - NZD/USD Daily - New Zealand Dollar vs US Dollar Technical Outlook

Technical Outlook: In my latest New Zealand Dollar Price Outlook we noted that the Kiwi, “advance now targeting the resistance at 6705/12 – a region defined by the 2019 open and the 50% retracement of the yearly range.The focus is on a reaction off this zone on the back of a seven-day advance in Kiwi with the immediate long-bias at risk into the yearly open.” NZD/USD is poised to mark a ninth consecutive daily advance if price closes at these levels with the rally now probing the 6705/12 resistance zone.

Watch the close of the week / month / quarter – a breach would keep the focus on the 61.8% retracement of the yearly range at 6766. Interim daily support rests at 6662 with broader bullish invalidation down at the highlighted trendline confluence around the 66-handle.

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Kiwi Price Chart - NZD/USD 120min

Kiwi Price Chart - NZD/USD 120min - New Zealand Dollar vs US Dollar Technical Outlook

Notes: A closer look at Kiwi price action shows NZD/USD trading within the confines of an ascending channel formation extending off the 6/19 low. IF price fails to close above the yearly open, look for a break of this channel / 6657/62 to suggest a near-term correction is underway.

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Bottom line: The Kiwi breakout is probing a key resistance zone into the close of Q2 and leaves the immediate long-bias at risk heading into the July open if price fails to close above 6705/12. From a trading standpoint, a good place to reduce long-exposure / raise protective stops. Be on the lookout for topside exhaustion here with a break below 6657 to offer a larger pullback. Ultimately , we’ll favor fading weakness while above 6600 on a larger pullback targeting a topside breach towards 6766. Review my latest Kiwi Weekly Price Outlook for a longer-term view of the NZD/USD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Kiwi Trader Sentiment - NZD/USD Price Chart

Kiwi Trader Sentiment - NZD/USD Positioning - New Zealand Dollar vs US Dollar Price Chart
  • A summary of IG Client Sentiment shows traders are net-long NZD/USD - the ratio stands at +1.1 (52.3% of traders are long) – neutral reading
  • Long positions are 0.3% lower than yesterday and 21.2% lower from last week
  • Short positions are 10.0% lower than yesterday and 98.6% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Kiwi (NZD/USD) prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger NZD/USD-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in NZD/USD retail positioning are impacting trend- Learn more about sentiment!

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Relevant New Zealand / US Data Releases

New Zealand / US Data Releases - NZD/USD Economic Calendar - Kiwi Event Risk

Economic Calendar - latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

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- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex