The New Zealand (NZD) extended upside movement against the US Dollar (USD) on Thursday, increasing the price of NZD/USD to more than 0.8370 following the release of some major economic reports. The sentiment however remains bearish due to Lower Low in the recent correction wave.
As of this writing, the pair is being traded around 0.8375. A support may be seen near 0.8310, the low of the recent dip ahead of 0.8273, the swing low of the last major correction and then 0.8200, the psychological number. The pair yesterday formed a classic bullish setup, indicating upside rallies in the near future.
On the upside, NZD/USD is likely to face a hurdle near 0.8343, the 23.6% fib level ahead of 0.8469, the 200-Day Simple Moving Average (SMA) and then 0.8510, the 38.2% fib level as demonstrated in the above chart. The sentiment will remain bearish as far as the 0.8511 resistance area remains unbroken.
The US economy grew at 4.2% in the second quarter as compared to the negative growth of 2.1% in the same quarter of the year before, up beating the median projection of 4.0% growth, a report by the US Bureau of Economic Analysis revealed today. Generally speaking, higher GDP reading is considered positive for the economy hence a better than expected actual outcome spurred short term selling pressure in the price of Kiwi Dollar.
Continuing Jobless Claims
The total number of jobless people who claimed unemployment incentives remained 2.527 million during the week ended on August 16 as compared to 2.50 million in the week before, a report by the US labor department said today, down beating the average forecast of 2.513 million. The downbeat actual outcome spurred moderate bullish momentum in the price of NZD/USD.
Considering the overall technical and fundamental outlook, buying the pair around the current levels appears to be a good strategy in short to medium term with a tight stop placed at the swing low of the recent correction wave as described above.