FxWirePro Medium Term Outlook: Kiwi May Strengthen to 0.81 Against Dollar
As outlook for commodities improve and Dollar weakens across board, New Zealand Dollar, may be poised for bigger jump this week. Tomorrow, after FOMC announce its monetary policy, Reserve Bank of New Zealand will announce its own monetary policy.
Kiwi has found support in the rising trend line, around 0.685 area and if both the central bank hold policy tomorrow, then Kiwi may once again rise from the trend line and break above 0.7 area.
However, our current call is over medium term and our calculation matrix, which has quite higher success rate is pointing to continuation of bull trend and Kiwi may test as high as 0.81 area. But we expect 0.77 area to prove as key resistance so we are taking a bit conservative approach and will recommend booking large chunk of profits around 0.77 region.
Over the last two auctions, dairy prices rose and is likely to rise faster over the coming auctions. Speculative positions also pointing to bigger rise in Kiwi against Dollar. As per latest data available from commodity futures and trading commission (CFTC), net speculative long position increased in New Zealand Dollar by 1059 contracts to +5.35K contracts.
Stop loss for this trade is around 0.62 area. However, we expect price to find support around 0.65 area.
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