There is a high probability that the currency pair NZD / USD closes in the next 10-20 days to a 0.7000 level. In a breakthrough, the next strong resistance can be expected at around 0.7200. The trend was supported by the decline in USD. US Dollar Index, which measures its ratio against a basket most traded foreign currency, notes a decrease of 5% from the beginning of 2016.
In the longer term, however, it will affect different policies of central banks of NZ and USA.
The signals, that reach the market, make it very uncertain at the moment. Europe slows its growth. Japan is in a similar situation. In China, the perspective is still not very clear, but the US economy is doing well, with excellent labor market and political uncertainty ahead of elections.
While it remains clear that the Fed has no choice and will tighten monetary policy as slowing, Reserve Bank of New Zealand has a desire and opportunities in the opposite direction. It looks almost certain, that the RBNZ will continue to soften (especially sue to pressure from the continuous loss in the farm sector in the country).
In this situation, in a horizon of 2-3 months,the probable movement in NZD / USD will be downwards, at least till the main support at around 0.6400 which now corresponds to the objectives of the RBNZ.
G.Hristov - Head of Fundamental Analyzes
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