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N.Z. Dollar May Climb Further, JPMorgan Says: Technical Analysis

July 30 (Bloomberg) -- New Zealand’s dollar may rise further against its U.S. counterpart after breaking through a key technical range, according to JPMorgan Chase & Co.

The South Pacific currency, nicknamed the kiwi, may strengthen to 82.40 U.S. cents, Niall O’Connor, a technical analyst at the firm, wrote in a note to clients today. That level hasn’t been reached since April 30. The kiwi exceeded the range of 80.55 to 80.90 cents on July 27.

“What the market’s done over the last few days does suggest there is still potential for the pro-risk rally to push higher,” New York-based O’Connor said in a telephone interview.

New Zealand’s currency rose as much as 0.2 percent to 81.13 U.S. cents today, the highest since May 2, before trading at 80.88 cents in New York, down 0.1 percent. It advanced 1.3 percent last week.

The European Central Bank will announce its next policy decision Aug. 2. ECB President Mario Draghi pledged last week to do whatever it takes to preserve the euro, suggesting policy makers may intervene in bond markets. The Federal Reserve starts a two-day meeting tomorrow amid speculation it may signal additional stimulus.

“That’s clearly going to be a huge factor for whether market can sustain this pro-risk rally,” O’Connor said. “Even if we get some disappointment, I would look for levels where these high-beta currencies would try to hold.” High-beta currencies tend to have the greatest volatility.

Resistance is a level on a chart where sell orders may be clustered. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net

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