NZD/USD: bullish tend reversing or 0.74 to remain robust?

NZD/USD had been a better performer of late with renewed weakness in the greenback, but the overnight picture looked very different to the business at the start of the week and the bird came under pressure.

NZD/USD dropped from the region of 0.7480 to find support only until the 100 sma on the 1hr chart at 0.7385. This comes despite the better than expected tone of Chinese economic data releases while, in USD terms, Chinese imports rose 1.5% y/y accompanied by an improvement in China’s official August manufacturing PMI to 50.4 from 47.9 in July. 

Analysts at Westpac offered a 1-3 month outlook for the bird as follows:

"During the month ahead we expect further gains into the 0.75-0.78 zone (the latter level marking a peak in April 2015). The US dollar looks vulnerable, yield-chasing flows remain strong, and NZ commodity prices are rising. By year end, there’s a case for a correction towards 0.70 if the Fed tightens in December as we expect. (8 Sep)."

US dollar index bounces and ends day higher

NZD/USD levels

Current price is 0.7405, and the handle is critical if the bird is to maintain a bullish bias. Resistance ahead comes at 0.7409 (Daily High), 0.7422 (Hourly 20 EMA), 0.7443 (Weekly Classic R2), 0.7445 (Daily Classic PP) and 0.7450 (YTD High). Next support to the downside can be found at 0.7402 (Daily Classic S1), 0.7399 (Daily Open), 0.7390 (Daily Low), 0.7385 (Hourly 100 SMA) and 0.7384 (Yesterday's Low), is a key support ahead of the 200 sma on the 1hr sticks at 0.7320.