The greenback and kiwi outperform in the foreign exchange market
Euro breaks support
The euro currency came under heavy selling pressure this week, with single currency falling to a fresh 2019 trading low against the US dollar as the greenback strengthened broadly and EU economic data continued to worsen. Weaker than expected monthly eurozone Industrial Production data and softer German fourth-quarter Gross Domestic Product numbers pushed the EURUSD pair closer to the 1.1200 level. The euro had also come under increasing pressure from the greenback, as the US dollar outperformed all major currencies this week. The euro was also hurt, as investors fear the United Kingdom’s upcoming departure from the European Union and the effects it may have on the already weakened eurozone economy.
- The EURUSD pair is strongly bearish while trading below the 1.1260 level, key support is found at the 1.1200 and 1.1180 levels.
- If the EURUSD pair trades above the 1.1260 level, further upside towards the 1.1360 and 1.1410 levels remains possible.
RBNZ less dovish
The New Zealand dollar moved sharply higher this week after RBNZ Governor Adrian Orr sounded less dovish than most market participants had been expecting. The Reserve Bank of New Zealand maintained rates at 1.75 per cent as widely expected, but sounded more bullish towards the New Zealand economy than markets had been expecting. The Reserve Bank said they did not plan to cut rates any time soon and expected a rate increase sometime during 2020. The NZDUSD pair raced higher on the more dovish statement, with the kiwi soaring above the 0.6800 level.
- The NZDUSD pair is bullish while trading above the 0.6740 level, key resistance is found at the 0.6900 and 0.7040 levels.
- If the NZDUSD pair trades below the 0.6740 level, sellers may test towards the 0.6680 and 0.6580 resistance levels.
UK data disappoints
The British pound remained under pressure against the greenback this week after the United Kingdom posted weaker than expected GDP and CPI inflation data. Monthly UK GDP contracted -0.4 per cent month-on-month, while fourth-quarter UK GDP expanded just 0.2 per cent, missing the 0.6 per cent forecast from most economists. UK CPI also tumbled -0.8 per cent during the first month of 2019, as Brexit uncertainty continued to hurt consumer prices alongside the recent drop in oil prices. The GBPUSD pair fell below the 1.2800 level and was weakened further by a renewed bid-tone in the US dollar.
- The GBPUSD pair is only bullish while trading above the 1.2930 level, key resistance is found at the 1.3095 and 1.3205 levels.
- If the GBPUSD pair trades below the 1.2930 level, sellers may test towards the 1.2740 and 1.2660 levels.
Oil prices received a strong boost this week as Saudi Arabia cut oil production levels more than analysts had been expecting, while rising optimism over Sino-US trade talks also helped support oil prices. The Kingdom of Saudi Arabia cut production by more than 500,000 barrels more than expected, sending Brent crude and WTI oil prices sharply higher on the week. Saudi Arabia is the world’s largest oil producer, cutting oil production usually helps to drive oil price higher due to the nations strong grip on the international oil market. Hopes that Sino-US trade talks would be extended past the March 1st truce deadline also helped to support commodity prices this week.
- WTI Oil is only bullish while trading above the $55.00 level, key resistance is found at the $57.50 and $60.00 level.
- If WTI Oil declines below the $53.50 level, sellers may test towards the $52.00 and $50.00 support levels.