Key Points:
- Last week’s trend could remain in place moving forward.
- GDT Price Index now in focus for the pair.
- 100 day EMA currently capping upsides.
The Kiwi Dollar moved unexpectedly higher last week as the greenback’s rally took a pause. Breaking through a key zone of resistance saw the pair build on its own momentum throughout the week, largely offsetting the US fundamentals that were posted. Additionally, a strong NZ Home Quotable Value result helped to add fuel to the pair’s rally later in the proceedings. As for the impending week, the GDT Price index is due out which is, as always, worth keeping an eye on.
Taking a closer look at last week, the NZD recovered strongly despite the rather strong US data that was posted. The rally largely resulted from a technical breakout to the upside which shattered the near-term ranging phase that had developed in the prior week. However, there was some additional momentum generated by a solid NZ Home Quotable Value result of 12.4% and an uptick in the US Unemployment Claims figure to 268K. Due to this additional momentum, the NZD largely ignored the seemingly paradoxical slip in the US Unemployment rate to 4.6% and closed sharply up by end of trading on Friday.
As for the impending week’s fundamental outlook, the GDT Price Index is going to take its usual place centre stage and it could provide further buying pressure for the NZD/USD. If the Index posts another increase, it could very well offset the effects of what is currently forecasted to be a strong US ISM Non-Manufacturing PMI result. However, also monitor the scheduled remarks from Wheeler as they could lead to some increased volatility.
Looking at the technical data now and the pair should remain tracking higher but gains could be somewhat mitigated by the 100 day EMA. Specifically, both the ADX and the Parabolic SAR readings are signalling that last week’s uptrend remains in place which could mean that the pair is poised to rack up some gains moving ahead. However, this will largely be contingent on the NZD closing above the 100 day moving average as this will be providing some dynamic resistance. This being said, RSI remains firmly in neutral territory which gives the pair room to manoeuvre this week.
Ultimately, we will simply have to wait and see if that GDT Index can conjure up another increase before we can have any firm bias moving forward. As a result, keep an eye on the release of the index as it could be the boost needed to see the NZD above the 100 day EMA. As discussed, if this occurs we could see the pair move into a rather solid bullish phase supported by the technical bias.