The New Zealand Dollar (NZD) extended downside movement against the US Dollar (USD) on Wednesday, dragging the price of NZDUSD to less than 0.6470 following the release of some key economic data. The technical bias however remains bullish because of a Higher High in the recent upside rally.
As of this writing, the pair is being traded around 0.6465. A support may be noted near 0.6235, the low of the last downside wave ahead of 0.6195-0.6200 which is the confluence of August low as well as psychological number as demonstrated in the following daily chart.
On the upside, the pair is expected to face a hurdle near 0.6500, the psychological number ahead of 0.6556, the 23.6% fib level ahead of 0.6896, the swing high of the last major upside rally. The technical bias will remain bullish as long as the 0.6200 handle is intact.
New Zealand Dairy prices dropped for the third time in a row at this morning’s GlobalDairyTrade auction, the GDT price index falling by 7.9 per cent since the last sale and putting more downward pressure on Fonterra’s farmgate milk price forecast for the current year. Whole milk powder prices, the key product for determining Fonterra’s farmgate milk price, fell by 11.0 per cent to $2148 a tonne.
At that level, whole milk powder prices are well short of the $3000 a tonne price that Fonterra’s current forecast of $4.60 a kg of milk solids rests on. The farmgate milk price forecast comes up for review next month.
Considering the overall technical and fundamental outlook, buying the pair near the 0.6250 zone could be a good strategy if we get a valid bullish reversal candle around that level.