Current trend

This week, the NZD/USD pair has ambiguous dynamics. After falling to the area of 0.6035, it has regained lost positions. However, its strengthening is happening despite the inflation data.

The Q2 consumer price index fell from 0.6% to 0.4% MoM instead of the expected 0.5% and from 4.0% to 3.3% YoY compared to 3.5%. The overall slowdown in indicators should have increased the likelihood of the Reserve Bank of New Zealand (RBNZ) officials starting to adjust interest rates. However, experts note that inflation is rising in several key sectors of the economy, such as housing, preventing the economists from switching to the “dovish” rhetoric this year.

The American dollar remains under pressure in the medium term due to expectations of a change in the US Fed’s monetary policy. Most members of the regulator’s board positively assessed the June slowdown in consumer price growth to 3.0%, which makes investors expect the first reduction in borrowing costs in September with a probability of 90.0%, according to the Chicago Mercantile Exchange (CME) FedWatch Instrument. In these conditions, a soon growth of the NZD/USD pair is possible.

Support and resistance

The trading instrument is close to a strong resistance level of 0.6103 (Murrey level [4/8], the middle line of Bollinger Bands), consolidation above which will allow it to reach the area of ​​0.6164 (Murrey level [5/8]) and 0.6225 (Murrey level [6/8], Fibonacci correction 23.6%). After a breakdown of 0.6042 (Murrey level [3/8]), a decline to the area of ​​0.5981 (Murrey level [2/8]) and 0.5920 (Murrey level [1/8]) may follow.

Technical indicators do not give a single signal: Bollinger Bands are turning down, and Stochastic is turning up. The MACD histogram is at the zero line, and its volumes are insignificant.

Resistance levels: 0.6103, 0.6164, 0.6225.

Support levels: 0.6042, 0.5981, 0.5920.

Trading tips

Long positions may be opened above the 0.6103 level, with the targets of 0.6164, 0.6225 and stop loss 0.6055. Implementation period: 5–7 days.

Short positions may be opened below 0.6042, with the targets at 0.5981, 0.5920 and stop loss 0.6080.