The New Zealand Dollar (NZD) extended upside movement against the US Dollar (USD) on Friday, for the 9th day in a row, increasing the price of NZDUSD to more than 0.6680 following the release of Dovish Federal Open Market Committee (FOMC) comments. This is the longest winning streak by the Kiwi Dollar in more than 17 months. The technical bias has already turned bullish because of a Higher High and Higher Low in the ongoing wave.
As of this writing, the pair is being traded around 0.6684. A hurdle may be noted near 0.6700, the psychological number ahead of 0.6737, the swing high of 29 July 2015. A break above 0.6737 could open doors for renewed buying interest, targeting the 0.7000 zone.
On the downside, the pair is likely to find a support around 0.6500, the psychological number ahead of 0.6235, the swing low of the recent downside move as demonstrated in the above daily chart. The technical bias will remain bullish as long as the 0.6235 support area is intact.
Federal Reserve officials put off an interest-rate increase in September because of growing risks, mainly from China, to their outlook for economic growth and inflation even as they continued to say they were on track to raise the target later this year, the minutes form recent FOMC meeting showed yesterday.
The FOMC noted that domestic economic conditions, including data on consumer spending and housing, had continued to improve, and the labor market had reached or was close to the committee’s long-run estimates for unemployment.
Still, concerns over China and its potential spillover to other economies “were likely to depress U.S. net exports” and cause further strengthening of the dollar, which could damp inflation in the U.S.
Considering the overall technical and fundamental outlook, waiting for a bearish reversal candle in NZD/USD pair could be a good strategy in short to medium term.