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New Zealand Dollar Forecast: NZD/USD, NZD/CAD, AUD/NZD

New Zealand Dollar Forecast: NZD/USD, NZD/CAD, AUD/NZD

2020-01-09 22:30:00
Peter Hanks, Analyst
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New Zealand Dollar Technical Forecast:

NZD/USD Technical Forecast

The New Zealand Dollar may extend its decline against the United States Dollar after encountering technical resistance to the topside. Stalling at confluent resistance around 0.6737 in early January, the pair has since retraced and is approaching support at the pair’s January 2019 swing low at 0.6578 and the Fibonacci level at 0.6550. Looking to price action from December, the area has displayed an ability to influence price which could allow NZD/USD to level off and briefly pause its decline.

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Further still, the zone could revive bullish interest as traders look to use the two-fold support as a launching pad for another run at the descending trendline. That being said, exploring a deeper retracement is more attractive from a risk reward perspective and aligns with the broader NZD/USD downtrend. For such a move to develop, the pair would have to pierce nearby support before targeting the 200-day simple moving average around 0.65. This would allow bears to aim even lower, perhaps to levels last seen in November – but would likely require a fundamental catalyst.

NZD/USD Price Chart: Daily Time Frame (October 2018 – January 2020) (Chart 1)

NZDUSD daily price chart technicals

NZD/CAD Technical Forecast

NZD/CAD finds itself trading in a similar position to that of NZD/USD, but with an arguably weaker counterpart. Consequently, bearish retracements may lack depth compared to the more heavily traded US Dollar cross, but I am hesitant to suggest outright Kiwi strength versus the Canadian Dollar.

Furthermore, NZD/CAD still exists within a long-term downtrend, so attempting to forecast a break out at this stage is rather presumptuous. With that in mind, it may be prudent to wait for a clearer entry that lends itself to NZD/CAD weakness if employing shorter-term strategies. In the meantime, follow @PeterHanksFX on Twitter for updates on this cross.

NZD/CAD Price Chart: Daily Time Frame (February 2018 – January 2020) (Chart 2)

NZDCAD daily price chart technicals

AUD/NZD Technical Forecast

In pursuit of potential Kiwi strength, AUD/NZD may be the best opportunity to explore such a bias over the longer-term. Although the pair has been on a downward spiral since mid-November, the cases for a weaker Australian Dollar have multiplied as economic data weakens and rate cut odds climb. Thus, the Kiwi could look to capitalize on continued AUD weakness and extend its climb in the coming weeks.

AUD/NZD Price Chart: Daily Time Frame (July 2018 – January 2020) (Chart 3)

AUDNZD daily price chart

That being said, the pair is nearing oversold territory at present which makes for an unattractive risk-reward profile. Therefore, bearish AUD/NZD opportunities would be most intriguing if the pair attempts a rally to nearby resistance around 1.0400, or better yet, around the 200-day moving average and Fibonacci level around 1.0557. At these levels, potential Kiwi strength becomes much more attractive, especially considering the strength of support at 1.03 which successfully rebuked previous attempts lower.

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Taking nearby support into consideration, AUD/NZD may allow for bullish opportunities in the shorter-term as it looks to retrace after weeks of downward extension although I personally prefer longer-term bearish opportunities.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more:How to Invest During a Recession: Investments & Strategy

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