Fundamental Analysis:

The New Zealand dollar closed lower against all baskets of other major currencies during last week’s trading session after the Reserve Bank of New Zealand surprised the market by cutting its Interest rate by 25 basic points, to a record-low of 3.25% from 3.50% and after said the local currency needs to weaken further. It was the first time the central bank lowered rates since 2011.

Commenting on the decision, RBNZ Governor Graeme Wheeler said the central bank has factored in another rate cut into its forecasts and is looking for a further fall in the local currency. So this puts us into a position to continuously sell the New Zealand dollar against the U.S dollar.


Meanwhile in the U.S economy, economic reports in the week, including on retail/core retail sales, consumer confidence, underlined the view that the economy is regaining momentum in the current quarter after a lackluster first quarter.


Technical Analysis:

Initial bias for this week remains bearish as 21 and 55 EMA remains crossed to the downward side in the 1 hour, 4 hours, daily and weekly time-frame. SSRC oscillator momentum also shows bearish momentum is still intact on all multi-time-frames. Am expecting further decline to 0.6560 support in the medium term picture. Another way to minimize risk and increase profit is to sell the rips whenever this pair retraces to a supply zone or resistance.


In the coming week, investors would be paying close attention to USD Federal Funds Rate, FOMC Statement, FOMC Economic Projections, CPI m/m and NZD GDP q/q.

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