NZD/USD is expected to trade in a higher range after hitting the 2.5-month low of 0.7208 on Wednesday. The kiwi sentiment is boosted after Fonterra said it will pay its 10,600 farmer shareholders NZ$5.25 per kilo of milk solids for the season starting June 1 versus downwardly revised NZ$4.40 (from prior forecast of NZ$4.50) for the season ending May 31. NZD/USD is also supported by the kiwi demand on the buoyant NZD/JPY cross amid reduced risk aversion and kiwi demand on the soft AUD/NZD cross and NZD-USD interest differential. But NZD/USD gains are tempered by the positive dollar sentiment, soft dairy prices, and speculation that the RBNZ would cut interest rate in the coming months.
The daily chart is still negative-biased as the MACD is bearish, stochastics stays suppressed at oversold levels, 5 and 15-day moving averages are falling.
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 0.7120. A break of that target will move the pair further downwards to 0.7090. The pivot point stands at 0.7225. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 0.7270 and the second target at 0.730.
Resistance levels: 0.7270 0.73 0.7350
Support levels: 0.7120 0.7090 0.7050
The material has been provided by InstaForex Company – www.instaforex.com