Fundamental Overview:
NZD/USD is expected to consolidate with a bearish bias after hitting a seven-month low at 0.8219 on Tuesday as markets await 2100 GMT Reserve Bank of New Zealand interest rate announcement (9 a.m. NZ time). RBNZ is expected to hold its official cash rate at 3.5%. NZD/USD is undermined by the weak dairy prices and healthier-than-expected rise in U.S. NFIB Index of Small Business Optimism to 96.1 in August from 95.7 in July (versus forecast 96.0). But NZD/USD losses are tempered by the Kiwi demand on the buoyant NZD/JPY cross amid the weak yen sentiment, Kiwi demand on soft AUD/NZD cross, NZD-USD interest differential and profit-taking on short-NZD positions ahead of RBNZ's rate decision, and higher U.S. Treasury yields (10-year at 2.502% versus 2.471% late Monday). Hawkish comments by the San Francisco Federal Reserve triggered expectation that the Fed might sound less dovish in next week's policy statement, and that a rate hike is potentially nearer than markets have anticipate.
Technical Comment:
The daily chart is negative-biased as MACD is bearish, stochastics stays suppressed in the oversold area, 5 and 15-day moving averages are falling.
Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 0.8215. A break of this target will move the pair further downwards to 0.8180. The pivot point stands at 0.83. In case the price moves in the opposite direction and bounces back from the support level, then it will moves above its pivot point. It is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 0.8350 and the second target at 0.8390.
Resistance levels:
0.8350
0.8390
0.8435
Support levels:
0.8215
0.8180
0.8175
The material has been provided by InstaForex Company - www.instaforex.com
