Key Highlights
- The New Zealand Dollar recovered nicely above 0.6400 against the US Dollar.
- NZD/USD surpassed a major bearish trend line with resistance near 0.6340 on the 4-hours chart.
- The US NFIB Business Optimism Index decreased from 104.7 to 103.1 in August 2019.
- The US PPI could increase 0.1% in August 2019 (MoM), less than the last +0.2%.
NZD/USD Technical Analysis
The New Zealand Dollar started an upside correction from the 0.6269 low against the US Dollar. The NZD/USD pair broke the 0.6300 and 0.6320 resistance levels to move into a positive zone.
Looking at the 4-hours chart, the pair gained pace above the 0.6350 resistance area. Moreover, there was a break above a major bearish trend line with resistance near 0.6340 on the same chart.
The pair also climbed above the 0.6400 resistance and the 100 simple moving average (red, 4-hours). Finally, the pair tested the 50% Fib retracement level of the last decline from the 0.6586 high to 0.6268 low.
At the moment, the pair is correcting gains and is trading well below 0.6440 plus the 200 simple moving average (green, 4-hours). Above the 200 SMA, the next key resistance is near the 61.8% Fib retracement level of the last decline from the 0.6586 high to 0.6268 low at 0.6465.
If there is a downside correction, the pair could find bids near the 0.6390 and 0.6380 levels. The main support is near the 0.6370 and the 100 SMA. If there is a close below the 100 SMA, the pair could resume its decline towards the 0.6300 support area.
Conversely, a successful close above the 0.6450 level and the 200 SMA could spark a fresh increase towards the 0.6500 and 0.6550 levels.
Fundamentally, the US NFIB Business Optimism Index for August 2019 was released recently. The market was looking for a minor increase from the last reading of 104.7 to 105.1.
The actual result was lower than the forecast, as the US NFIB Business Optimism Index declined from 104.7 to 103.1.
The report added:
Overall, August was a good month for small business. However, optimism slipped because fewer owners said they expect better business conditions and real sales volumes in the coming months.
Overall, NZD/USD remains buy on dips near the 0.6380 and 0.6370 levels. Similarly, GBP/USD is showing positive signs, but EUR/USD is struggling to gain traction.
Upcoming Economic Releases
- US Producer Price Index August 2019 (MoM) – Forecast +0.1%, versus +0.2% previous.
- US Producer Price Index August 2019 (YoY) – Forecast +1.8%, versus +1.7% previous.
- US Wholesale Inventories for July 2019 – Forecast +0.2%, versus +0.2% previous.
