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NZD/USD Forecast February 24 – 28

The kiwi had a rough week after the macroeconomic data from New Zeeland was pretty weak with all three publications being below expectations. The highlights of the week were the retail sales, which fall short of the forecasted value with an increase of just 1.2% in comparison with 1.7%, which was the expected value.  The downside of NZDUSD was magnified by the data from the American economy that even was kind of weak, the Flash Manufacturing PMI came way better than the expectations. Overall, NZDUSD declined on a weekly basis and retreated below 0.8300.

Economic Calendar

Inflation Expectations q/q (9:00 GTM)-Monday. A medium impact indicator which measures the percentage that business managers expect the price of goods and services to change annually during the next 2 years. It is important because expectations of future inflation can manifest into real inflation and workers tend to push for higher wages when they think prices will rise.

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Trade Balance (4:45 GTM)-Wednesday. A very important macro indicator that measures the difference in value between imported and exported goods during the reported month. A positive number indicates that more goods were exported than imported and this would be good for the economy. So, an actual value that is above the expected one will be good for the currency. This month it is expected a surplus of 230 million NZD.

Visitor arrivals m/m (4:45 GTM)-Wednesday. This indicator represents the change in the number of short-term overseas visitors who arrived in the country. It plays an important role because tourism is a big part of the New Zeeland economy as 10% of the population is employed by the tourism industry.

Building Consensus m/m (4:45 GTM)-Thursday. Also called Building Permits, it measures the change in the number of new building approvals issued. It is a leading indicator for the real estate industry and also for the economy as the construction sector creates jobs and it gives a clue about the health of the economy. For the last 2 months, the actual value was above the expectations, so it will be interesting to see if the real estate industry can keep the ascending trend.

Technical view

NZDUSD, Daily

Support: 0.8220, 0.8130

Resistance: 0.8350, 0.8400

nzdusd-daily-forecast-february-24-28-23.02.2014 resize

The daily chart paints a pretty bearish picture for NZDUSD with a candlestick pattern called Shooting Star which usually inverts ascending moves into descending ones. For the next week I see the price action getting in a downtrend and testing the 50.0 Fibonacci level  with a high chance to even close below 61.8 and hit the daily support level at 0.8130.

NZDUSD, H1

Support: 0.8255, 0.8220

Resistance: 0.8340, 0.8400

nzdusd-h1-forecast-february-24-28-23.02.2014 resize

The hourly timeframe presents us a bearish perspective forming a symmetrical triangle, a continuation pattern, in a descending trend. The major scenario is a descending one and a breakout confirmed by a close below the 0.8255 support could validate the pattern and could send the price towards the daily support at 0.8220. Also, you should be cautious about the price trading in a range before validating the pattern.

Bullish or Bearish

For the next week I see the NZDUSD continuing the downwards movement it had last week after both the daily and hourly chart give me bearish signals. An aspect which could undermine the bearish outlook is the fundamental part as this week we will have some important date coming from New Zeeland, so I would not be surprised if the descending trend could turn into a trading range.

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NZD/USD Forecast February 24 - 28 by