The New Zealand Dollar (NZD) fell broadly against the US Dollar (USD) on Wednesday, dragging the price of NZDUSD to less than 0.7300, following the release of some key economic news. The technical bias remains bearish because of a Lower High in the recent upside rally.
As of this writing, the pair is being traded near 0.7278. A support can be seen around 0.7235, the swing low of the latest major downside move ahead of 0.7200, the psychological number as well as another major horizontal support as demonstrated in the given below four-hour chart. A break and four-hour candle closing below the 0.7200 shall incite the renewed selling interest, validating a move towards the 0.7000 region in the long run.
On the upside, the pair is expected to face a hurdle near 0.7291, the horizontal resistance ahead of 0.7334-0.7357 resistance area, which is a key horizontal resistance area. A break above 0.7357 is needed in order to trigger further bullish momentum, putting 0.7500 in sight for the long term.
International milk prices rose in the overnight Global Dairy Trade auction, but the increase was less than expected. The GDT Price Index, which covers a variety of products and contract periods, climbed 1.7 percent with an average selling price of $2,975 per tonne, in the auction held on Tuesday. Whole milk powder, which makes up the bulk of the auction, eased 0.2 percent to $2,782 percent while skim milk powder rose 3.0 percent. Dairy futures contracts had pointed to a stronger rise, in particular in whole milk powder. Until recently, dairy has been the backbone of New Zealand’s economy, representing around 25 percent of exports. But dairy prices have dropped sharply from their record highs in 2013, due to China’s economic slowdown and global oversupply.
Considering the overall technical and fundamental outlook, selling the pair on short term rallies appears to be a good strategy in short to medium term.