The exchange rate between the US dollar and the New Zealand dollar may have misled most of the forex traders with its two-weeks fall, that could prove only a trap, that’s why the bearish traders are risking so much.
The strength of the dollar in recent weeks has been fueled by the monetary policy decisions taken by the Federal Reserve under the guidance of Janet Yellen, who probably will increase the interest rate in the United States before the end of 2016, but the climb of the US dollar could subject to a screeching halt.
The divergence between FED and RBNZ
The Federal Reserve is going to increase the interest rate in the US soon, on the wave of good news on the health of the US economy. Contrariwise, the Reserve Bank of New Zealand is continuing along its path that led, in two years, to decrease the interest rate from 3% to 1.75%. A divergence of roads already partly discounted by the currency market, that in the coming months could lead to a new big fall for NZD/USD.
NZD/USD technical analysis: why to be careful
The market discounts the news in a short time and the collapse of the exchange NZD/USD of the last two weeks is an example of how operators have learned the divergence in monetary policy between the United States and New Zealand. In the next week, though, there will be no strong macroeconomic news and technical analysis could give new breath to purchases.
In the daily timeframe chart, the stochastic oscillator shows a phase of hyper-sold and, at the same time, the weekly timeframe chart launches another alarm: even though for the long term we have strong bearish signals, the short-term trend of the major NZD/USD remains positive and the psychological support of 0.7000 is still unbroken. The break of the uptrend could be false and the price, in the coming days, could rebound strongly until the return above the resistances of 0.7113 and 0.7218.