Key Points:
- Ascending triangle nearing completion.
- Bullish EMA activity.
- Important NZ Trade Balance result due early this week.
The Kiwi Dollar had a strong week of gains but, ultimately, failed to push through resistance around the 0.7310 mark. The pair’s impressive performance came largely as a result of both Tuesday’s GDT Price Index and NZ employment data, these figures coming in much stronger that forecasted. As for this week, the NZD/USD will be looking to the NZ Trade results for buoyancy which could help to see the 0.7310 level broken.
The Kiwi Dollar enjoyed a significant swell in sentiment early on last week, the result of some substantial improvements in both the GDT Price Index and the NZ employment data. Specifically, the GDT Price Index continued to surge strongly, this time increasing by a staggering 12.7%. Subsequently, the NZ Unemployment rate sank from 5.7% to 5.1% which saw the pair remain highly buoyant throughout the rest of the week.
As we move forward, Tuesday will be vital this week as the NZ Trade data is due to be posted. Current forecasts are predicting that the Trade balance figure should be in at around -323M so watch out for any significant deviations from this as it could impact the pair strongly. On the US side of things, there could be some increased volatility and sentiment swings as a result of some scheduled remarks by Fed Chair Yellen and the Jackson Hole Symposium.
Looking at the technical data, the NZD/USD is coming close to the completion of an ascending triangle or possible rising wedge formation which could mean a slip if it fails to push through the 0.7310 level. The bullish bias of the daily EMA should mean that the NZD continues to climb as the week opens but the zone of resistance around 0.7310 is unlikely to be broken in the absence of some strong fundamental results on Tuesday. Consequently, keep an eye on the pair as it reaches this level as, if it reverses, the Kiwi Dollar could see a downside breakout occur.
All in all, whilst the NZD is looking set to stay bullish this week, keep a close eye on the pair as it is becoming highly likely that we will see a serious breakout in the near future. If such a breakout does occur, it is currently more probable that it sends the Kiwi Dollar lower which could see the 0.7138 support tested again. However, fundamentals will be in play this week so watch out for any releases made as the pair tests key levels.