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Greenback on the Defensive- Kiwi Strength Persists

Greenback on the Defensive- Kiwi Strength Persists

2011-05-26 14:00:00
Michael Boutros, Technical Strategist
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Daily Winners and Losers

Greenback_on_the_Defensive-_Kiwi_Strength_Persists__body_Picture_2.png, Greenback on the Defensive- Kiwi Strength Persists Greenback_on_the_Defensive-_Kiwi_Strength_Persists__body_Picture_3.png, Greenback on the Defensive- Kiwi Strength Persists Greenback_on_the_Defensive-_Kiwi_Strength_Persists__body_Picture_4.png, Greenback on the Defensive- Kiwi Strength Persists

The New Zealand dollar surged in overnight trade, breaking through the upper bound trendline of the ascending wedge formation that has held the pair since May 3rd. The kiwi advanced 1.35% against the dollar before encountering resistance at the 0.81-figure in pre-market trade. The gains come on the back of a report that was published in a domestic kiwi publications that suggested China may be looking to invest heavily in the New Zealand and Australian economies, giving lift to the Asia Pacific currencies. Topside targets are eyed at the 3-year high hit on May 2nd at 0.8120 and the 76.4% Fibonacci extension taken from the May 28th 2010 and March 18th 2011 troughs at 0.8190. Interim support is rests at 0.8070 with subsequent floors eyed at 0.8030 and the 0.80-figure. Today’s weaker than expected US GDP print should continue to weigh on the greenback as traders begin to factor in the prospect of slower growth for the second half of 2011.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.7825

20-Day SMA

0.7936

10-Day SMA

0.7922

2011 High

0.8120

Greenback_on_the_Defensive-_Kiwi_Strength_Persists__body_Picture_5.png, Greenback on the Defensive- Kiwi Strength Persists Greenback_on_the_Defensive-_Kiwi_Strength_Persists__body_Picture_6.png, Greenback on the Defensive- Kiwi Strength Persists

The loonie was the only major to lose ground against the dollar, albeit by a modest amount of just 0.18%. The USD/CAD pair continues to range trade between 38.2% and 61.8% Fibonacci extension taken from the May 11th and 20th troughs at 0.9747 and 0.9810 respectively. The loonie pair broke through trendline resistance on Monday that dates back to September with pair expected to remain supported in the days to come. A topside breach sees subsequent ceilings at the 76.4% Fib extension at 0.9850 and the 0.99-handle. A break below interim support eyes floors just below the 23.6% extension at the 0.97-figure and 0.9680.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.9650

20-Day SMA

0.9659

10-Day SMA

0.9735

2011 Low

0.9443

Written by Michael Boutros, Currency Analyst for DailyFX.com

To contact the author of this report or subscribe to their daily analysis, please send inquiries to:mboutros@dailyfx.com

You can also follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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