COZfx: NZD/USD weekly outlook

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COZforex: The New Zealand dollar ended Friday’s session at a 4-week high against its broadly weaker US counterpart, as hopes for an agreement on a bailout deal for Cyprus ahead of Monday’s deadline saw investors shun the greenback and move in to riskier assets.

NZD/USD hit 0.8361 on Friday, the pair’s highest since February 25; the pair subsequently consolidated at 0.8351 by close of trade, 0.95% higher for the week. COZ forex senior currency strategist Ian • Quigley said, NZD/USD is likely to find support at 0.8249, Thursday’s low and resistance at 0.8415, the high from February 25.

The US dollar came under additional pressure amid indications the Federal Reserve would keep its loose monetary policy in place for the indefinite future, despite signs of a strengthening US economy. The US central bank announced Wednesday that it will leave its asset-purchase program unchanged, citing concerns over high unemployment levels and risks from tax increases and federal government spending cuts.

Fed officials reaffirmed their commitment to keeping monetary policy accommodative at least until unemployment drops to 6.5%. The current unemployment rate is 7.7%.

Meanwhile, upbeat domestic economic data provided a lift for the kiwi after a report on Wednesday showed that New Zealand's gross domestic product rise 1.5% in the fourth quarter, beating predictions for a 0.9% rose and following an expansion of 0.2% in the previous quarter.

The kiwi also found support during indications that China’s economic recovery is still on track after data on Thursday showed that China’s HSBC purchasing managers' index rise to 51.7 in March from 50.4 in February. Additionally, China is New Zealand's second biggest export partner.

In the week ahead investors will be closely monitoring developments in Cyprus as a failure to reach a deal could see the country exit the euro zone.

(COZ forex UK)