NZD/USD chart on Trading View used for analysis
- NZD/USD extends cloud breakout, trades above 0.69 handle, bias higher.
- The pair is trading 0.34% higher on the day at 0.6914 at 0515 GMT, slightly below session highs at 0.6923.
- The major showing resilience, largely due to Fed's outright dovish stance and upbeat China PMI reports.
- Despite expectations for the Fed to leave rates on hold, the exceedingly dovish undertone spooked markets, forcing a sharp correction in the USD.
- Further, official China manufacturing PMI for Jan printed at 49.5, beating the estimate 49.3 and up from the previous month's 49.4.
- Meanwhile, the official non-manufacturing PMI rose to 54.7 in January, also beating the estimate of 53.9.
- Technical studies support further upside. But we see major resistance in the 0.6930-60 range.
- Breakout at 0.6960 (200-W SMA) will propel the pair higher. Scope then for test of 61.8% Fib at 0.7050.
- On the flipside, rejection at 200-W SMA and retrace below cloud will see further weakness.
Support levels - 0.6861 (5-DMA), 0.6811 (38.2% Fib), 0.6773 (55-EMA), 0.67
Resistance levels - 0.6930 (trendline and 50% Fib), 0.6960 (200-W SMA), 0.7050 (61.8% Fib)
Recommendation: Good to stay long on dips around 0.6890/0.69, SL: 0.6860, TP: 0.6930/ 0.6960
For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
