New Zealand is preparing for general elections on September 23rd, which will determine New Zealand’s parliament members as well. Nearly a month before the general elections and a couple of days before the Jackson Hole Symposium, the government cut the kiwi’s growth outlook for this fiscal year and the next. For the year to June, the New Zealand Treasury decreased its forecasts to 2.6% from 3.2% initially estimated. Moreover, for the year to June 2018, the treasury lowered its growth projection to 3.5% from 3.7% announced in the previous budget update in May. The growth reduction led to declines in the New Zealand dollar’s value, which edged 0.66% lower yesterday and more than 0.9% today.
NZD/USD – Technical Analysis
The commodity currency pair is recording a bearish month, losing more than 4% from its performance. The NZD/USD pair has an aggressive selling interest in August after the bounce off the 0.7560 resistance obstacle. In addition, the price plummeted below the 200-week SMA, as well as below the 38.2% Fibonacci retracement level of the big upward movement, with low at 0.6820 and high at 0.7560. Currently, the price is ready to hit the 0.7200 strong psychological level, which overlaps with the 100-SMA, as well as the 50.0% fibo level, which is holding slightly lower.
In case of a break below 0.7200, our expectation is a hit of the 61.8% fibo level, near 0.7100. On the other hand, if the price rebounds on the latter level, it will be exposed towards the 38.2% fibo level, near 0.7275. On the daily timeframe, the technical indicators head sharply lower within the bearish territory. The RSI indicator is weakening below the 50 level and the MACD oscillator dropped below the trigger line, is strengthening its falling momentum.
Analysis by JFD Research