NZD/USD: Bullish Flag in Bearish Fundamentals
NZD/USD remains within a bearish formation, sliding from recent 0.6784 highs on the 17th March and continuing a drift to the downside, having made lows of 0.6668 so far.
NZD/NZD has been softer of late due to speculation that the RBNZ could cut again as soon as April's meeting following the RBNZ's 25bp rate cut on 10 March when the Centra Bank signalled that it expects to cut once more to 2.0%.
Imre Speizer, analyst at Westpac explained that their economists forecast a 2.0% low, but see risks skewed to the downside. "We expect the next rate cut to be in June, but there's a decent chance it could be in April." Meanwhile, markets will be focusing on fuller floors after the Easter holiday and plenty of key US data for the week ahead.
For the week ahead, in the US, PCE arrives first ahead of the US the ISM manufacturing index. Eyes will be focused on whether it can break out of contractionary territory in March. Then, the showdown comes in nonfarm payrolls.
NZD/USD has recently penetrated down below the 20 dma at 0.6715 today. This move is opening scope for a continuation of the reversal, targeting 0.6575. However, analysts at Westpac explained that the bird's recent ranges, between 0.64 and 0.69 is creating an ascending triangle in a bullish formation. "Confirmation requires a break above 0.6900. If that occurs, there is potential for a rally into the low 0.70s. If 0.6900 holds, then we will look for a continuation of the range and the possibility of a downside test instead."
(Market News Provided by FXstreet)