The New Zealand dollar had a modest decline against the Australian dollar early in New York after a report showed that dairy prices rose 1.0%. Despite the small increase, the kiwi did not rally across most of its major trading partners as rising supplies and falling demand should keep the dairy rally very small this year. Higher dairy prices and strong demand can be bullish for the New Zealand dollar. The kiwi is also weaker against the US dollar and appears poised to test the lower boundary of the .7600- .8000 range that has been in place since October.
The AUD/NZD daily chart displays the recent downtrend appears to have bottomed out with the January 7th record low at 1.0353. Bullishness appears to be gaining momentum because the downward sloping trendline in red has been taken out. The recent rally appears that price is poised to attempt to recapture the 50-day SMA at 1.0688. The two-month slide appears to be over and if price can have a weekly close above 1.0750, further upside may taret he 1.1250 region.
To the downside, major support will come from the 1.05 -1.0550 region. A close below that zone could see limited weakness targeting 1.03 level.
The trade: Buy AUD/NZD at 1.0610 with a stop loss at 1.0560 and a take profit at .1.0710. The Risk/Reward Ratio is around 1:2
Edward J. Moya
WorldWideMarkets Online Trading