Forex Technical Update
New Zealand's GDP data for the March quarter came in strongest since Q1 of 2007. This bodes well for the Kiwi on top of the boost it already has been getting from risk-on trading in June, which stems from the markets hope for an eventual European fiscal union.
Today's the market was left indecisive and volatile after the FOMC policy meeting and Bernanke's speech. But as EUR/USD, GBP/USD AUD/USD and USD/CAD all trades within the range set after the initial whipsaw reactions both ways, the NZD/USD managed to break new highs following the surprisingly positive GDP data which beat estimates of 0.5% coming in at 1.1%.
NZD/USD 1HChart 9:50PM EDT 6/20/2012
The 1H chart above shows the pop after the release, pushing NZD/USD above 0.80 briefly. The RSI stayed above 40 and broke above 60, continuing to confirm the persistent bullish momentum in June.
There is a throwback that started a couple hours after the GDP release (6:45PM EDT). The 0.80 level is holding for now.
If the market can remain above 0.7940, the bullish stance remains. Preferably we don't even have such a strong throwback and stay above 0.7950 for a clearer upside outlook.
To the downside, the bullish stance is still holding until the market breaks below the rising trendline that's been holding June's rally. A break below 0.7880 should do it, especially if the 1H RSI tags 30, the first time since the June-recovery.
However, for now, there is indeed room to the upside, but not that much until we meet key resistance factors. The daily chart shows that at 0.8050, we have the March-April consolidation support pivot. At the 0.81 psychological level, we are also likely to encounter the declining trendline that's been holding the 2012 decline.
NZD/USD Daily Chart 9:56PM EDT 6/20/2012
Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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