NZD/USD Forecast February 20, 2015, Technical Analysis

The NZD/USD pair fell during the session on Thursday, testing the 0.75 handle. That being the case, looks as if the market is essentially going to meander around this area. There is a significant amount of resistance all the way up to the 0.7650 level, so that being the case we are sellers on signs of resistance, just as we would sell below the 0.74 level as it would show a continuation of the longer-term downtrend. We have no interest in buying, because the Royal Bank of New Zealand has recently entered the market to sell the Kiwi dollar, so quite frankly we have no interest in trying to go against that potential danger.

Ultimately, we believe that the commodity markets will continue to work against the Kiwi dollar anyway, as it is so highly influenced by the general attitude of commodity markets worldwide. On top of that, US dollar of course works against the commodity markets in general, so as long as they are soft, this pair should continue to go lower overall. We look at this bounce as a potential selling opportunity, and “value” in the US Dollar.

Because of this we are looking for opportunities and we believe that they will present themselves as the market should head down to the 0.7150 level again. In fact, the Royal Bank of New Zealand has recently stated that they believe “fair value” in this particular currency pair is closer to the 0.68 handle. Because of this, we believe that the market will continue to sell rallies as it’s probably only a matter time before Wellington get involved anyway.

In fact, it’s not until we get above the 0.79 level that we would even consider buying, something that doesn’t look very likely at this point in time, so therefore it’s only a matter of waiting for a nice selling opportunity to get involved in this market. We believe that this pair does in fact had to at least the 0.70 level over the longer term so we are being very patient in the meantime.