We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Bearish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Kiwi to Holds near Record Highs as Euro Continues to Drift Lower

Kiwi to Holds near Record Highs as Euro Continues to Drift Lower

2011-07-28 15:12:00
Michael Boutros, Strategist
Share:

Daily Winners and Losers

Kiwi_to_Holds_near_Record_Highs_as_Euro_Continues_to_Drift_Lower_body_Picture_2.png, Kiwi to Holds near Record Highs as Euro Continues to Drift LowerKiwi_to_Holds_near_Record_Highs_as_Euro_Continues_to_Drift_Lower_body_Picture_3.png, Kiwi to Holds near Record Highs as Euro Continues to Drift LowerKiwi_to_Holds_near_Record_Highs_as_Euro_Continues_to_Drift_Lower_body_Picture_4.png, Kiwi to Holds near Record Highs as Euro Continues to Drift Lower

The kiwi remains the best performer an hour into North American trade, advancing more than 0.37% against the greenback. As expected the Reserve Bank of New Zealand left interest rates unchanged at 2.50%. However the accompanying remarks made by Governor Allan Bollard fueled speculation for future rate hikes after he cited that, “provided current global financial risks recede and the economy continues to recover, the bank sees little need for the March ‘insurance’ cut to remain in place much longer.” However the kiwi’s advance was capped after Bollard continued to state that, “the current high value of the New Zealand dollar is acting as a drag on the economy.” He went on to cite that, “if this persists, it is likely to reduce the need for further cash rate increases in the short-term.” Traders took the statement as a signal that the central bank may hold off on hikes until the kiwi’s strength starts to taper off, limiting the currencies advance immediately after the announcement. The NZD/USD remains within a well-defined ascending channel with the pair continuing to straddle the 38.2% short-term Fibonacci extension taken from the July 15th and 25th troughs at 0.8723. Future kiwi price action will hinge on risk appetite, with topside targets eyed at the 50% Fibonacci extension at 0.8760 and the 61.8% extension at 0.8790. Interim support now rests at the 23.6% extension at 0.8680, with subsequent floors seen at 0.8660 and 0.8620.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8256

20-Day SMA

0.8454

10-Day SMA

0.8604

2011 Kiwi High

Pending

Upcoming Events

Date

GMT

Release

Expected

Previous

7/29

3:00

Money Supply M3 (YoY) (JUN)

-

5.7%

Kiwi_to_Holds_near_Record_Highs_as_Euro_Continues_to_Drift_Lower_body_Picture_5.png, Kiwi to Holds near Record Highs as Euro Continues to Drift LowerKiwi_to_Holds_near_Record_Highs_as_Euro_Continues_to_Drift_Lower_body_Picture_6.png, Kiwi to Holds near Record Highs as Euro Continues to Drift Lower

The euro was the worst performer for the second consecutive day, falling more than 0.42% against a modestly stronger dollar. Ongoing concerns regarding the crisis in Europe continue to weigh on the euro after rating agency Standard and Poor’s downgraded Greek debt by 2 notches, citing the newly agreed stability plan announced last week in Brussels may not be enough to prevent the further contagion to the periphery nations. The single currency is likely to remain on the defensive after breaking below the key 1.4330 level in pre-market trade noting interim support at the 38.2% Fibonacci extension taken from the July 3rd and 26th peaks at 1.4250. A break here eyes downside targets at the 1.42-figure and the 50% extension at 1.4160. Topside resistance now holds at 1.4330, with a breach targeting subsequent ceilings at the 1.44-handle, 1.4460, and 1.4520. Overnight traders will be eyeing retail sales data out of Germany and the Eurozone CPI estimate for July.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

1.4319

20-Day SMA

1.4285

10-Day SMA

1.4296

2011 EUR High

1.4939

Upcoming Events

Date

GMT

Release

Expected

Previous

7/29

6:00

German Retail Sales (MoM) (JUN)

1.7%

-2.8%

7/29

6:00

German Retail Sales (YoY) (JUN)

-1.6%

2.2%

7/29

9:00

Euro-Zone Consumer Price Index Estimate (YoY) (JUL)

2.7%

2.7%

Written by Michael Boutros, Currency Analyst for DailyFX.com

To contact the author of this report or receive his daily reports, 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.

DISCLOSURES

News & Analysis at your fingertips.