NZD/USD Daily Forecast – NZD Slips to 5-year LowThe New Zealand economy is heavily dependent on international trade, and the escalation in trade tensions between the U.S. and China does not bode well for the economy or the New Zealand dollar.
Trade War Woes Weighing on Kiwi
The country’s trade balance took a nosedive in July, as New Zealand posted a whopping trade deficit of 685 million NZD, marking its first trade deficit since January. The ANZ Business Confidence indicator fell to -52.3, down from -44.3 a month earlier.
Weak global conditions have taken a bite out of the NZ dollar, which endured a dismal summer. The currency fell 2.4% in July and lost another 3.7% in August. On Tuesday, NZD/USD touched a low of 0.6269, its lowest level since September 2015. Will the kiwi’s sharp downturn continue?
NZD/USD has plunged 6.7% since mid-July, resulting in a sharp downward trend line.
NZD/USD has been on a downward trend dating back to August, but the downward streak has halted this week. The pair posted small gains on Tuesday and is steady in Wednesday’s Asian session. We’ll have to wait to see if this is a temporary retracement, or has the currency leveled out.
On the upside, 0.6425 is an important resistance line. This line was providing support up until mid-August, and has strengthened as NZD/USD has fallen to lower levels.
0.6250 is a major support level. Just a few weeks ago, the line appeared very strong, and for good reason – it has held firm in support since September 2015. However, if the NZ dollar continues to lose ground, this line will become vulnerable.