NZD/USD finds support ahead of 0.72, still down more than 50 pips
Although it made an attempt to break above the 0.73 handle on Wednesday, the NZD/USD pair came under pressure during the American trading hours and fell towards the 0.72 handle. However, before testing that level, the pair seems to have found a short-term support at 0.7220 and is now trading at 0.7232, losing 55 pip, or 0.75%, on the day.
The greenback's upsurge today was fueled by the fresh developments from the White House which suggested that Trump administration was taking decisive steps to enact a tax reform before the end of 2017. After Paul Ryan, Speaker of the U.S. House of Representatives, announced that they were going to release an outline of the tax bill during the week of September 25, the US Dollar Index jumped above the 92 handle to renew its weekly high at 92.45. At the moment, the index is at 92.40, up 0.56% on the day.
- US House Ways & Means Chair Brady: To release tax plan on week of Sep 25th
- U.S. House Speaker Ryan: Goal is to have tax reform enacted into law by year's end
During the early trading hours of the Asian session, the employment report and the CPI data from Australia will be followed closely by the participants. A stronger-than-expected reading could lift the aussie against its peers, allowing the positively-correlated kiwi to erase its losses against the USD. On Thursday, the Business NZ is going to release its PMI data for August. After coming at 55.4 in July, another reading above the 50 handle could point to an ongoing healthy economic growth in New Zealand.
Technical outlook
On the downside, the first technical support for the pair could be seen at 0.7220 (daily low/10-DMA) followed by 0.7155 (200-DMA) and 0.7100 (psychological level). On the flip side, resistances align at 0.7320 (50-DMA) ahead of 0.7415 (Aug. 7 high) and 0.7500 (psychological level). The RSI indicator on the daily graph turned south below the 50 handle today, suggesting that the bearish pressure is building up.
- NZD/USD seen gravitating within 0.7130-0.7300 – UOB