Trading the NZD/USD Currency Pair

The NZD/USD currency pair is currently trading at 0.7109, down 0.05% or -0.0003. For the year-to-date, this currency pair has appreciated by 3.95% after opening at 0.6841 on 1 January 2016. Over the past 5 days, the pair has depreciated by 1.59%, likely due to the strong performance in US non-farm payrolls (+287,000 new jobs for June versus a 175,000 consensus forecast). Over the past 1 month, the pair has appreciated by 0.32%, after starting at 0.7089 on 20 June and appreciating slightly to its current trading range.

If we compare the performance of the NZD/USD pair to the Dow Jones Industrial Average, it has been lacklustre for the year-to-date. The Dow Jones has rallied by 8.04% versus 3.95% for the currency pair. When measured against the NASDAQ Composite Index which is currently at 5,055.74, the NZD/USD pair bests the index by 3.95% to 3.11%. And finally, when comparing the NZD/USD pair to the S&P 500 index, the latter has appreciated by 7.59% for the year-to-date versus 3.95% for the currency pair.

Technical Analysis of the NZD/USD Currency Pair

It is worth pointing out that the daily technical analysis indicators for this pair are bearish. If we take a look at the moving averages, we see a neutral rating with an equal number of buy and sell options on the currency pair. In terms of technical indicators, analysts overwhelmingly rate it as a strong sell. Let’s take a look at some of the pivot points with the Classic, Fibonacci and Camarilla yardsticks and see how support and resistance levels measure up as at July 18, 2016:

Classic

• Support 3 at 0.6957, Support 2 at 0.7013 and Support 1 at 0.7043. The pivot point is at 0.7099. Resistance 1 is at 0.7129, Resistance 2 is at 0.7185 and Resistance 3 is at 0.7215.

Fibonacci

• Support 3 is at 0.7013, Support 2 is at 0.7046 and Support 1 is at 0.7066. The pivot point is at 0.7099. Resistance 1 is at 0.7132, Resistance 2 is at 0.7152 and Resistance 3 is at 0.7185.

Camarilla

• Support 3 is at 0.7050, Support 2 is at 0.7058 and Support 1 is at 0.7066. The pivot point is at 0.7099. Resistance 1 is at 0.7082, Resistance 2 is at 0.7090 and Resistance 3 is at 0.7098.

Turning our attention to moving averages, we can see that the short-term moving averages for this currency pair (simple and exponential) are sell options. MA-5 is a sell, MA-10 is a sell and MA-20 is a sell. MA-50, MA-100 and MA-200 (simple and exponential moving averages) are all buy options. In terms of moving averages overall, a neutral summary has been indicated by analysts.

Technical indicators present an altogether different picture for traders of this currency pair. The RSI (14) at 47.768 indicates a neutral action, but the STOCH (9, 6) at 42.051 is a sell, as is the ADX (14) at 30.133, and the CCI (14) at -121.0811. Overall, member sentiment is largely bearish for this currency pair, given that the USD has been performing strongly of late.

Factors Affecting the NZD/USD Pair

The NZD/USD pair is a popular currency pair trading FX arena. It features as 1 of 7 majors in the forex market. As with other currencies there are various factors (endogenous and exogenous) that affect the value of this currency. These include the interest-rate set by the Federal Reserve Bank for the US, which is currently at 0.25% – 0.50%, and the Reserve Bank of New Zealand. (2.25%). US non-farm payrolls and other important macroeconomic indicators have a big effect on the value of the currency, vis-a-vis the outlook for the US economy or the New Zealand economy respectively.