Current trend

During the Asian session, the New Zealand dollar is developing a strong “bullish” momentum formed at the end of last week and is testing the 0.6120 mark for a breakout, renewing highs of July 12. Traders are in no hurry to open new positions on the American currency, preferring to wait for the publication of the minutes of the July meeting of the US Fed on monetary policy and the speeches of central bank representatives at the annual Economic Symposium in Jackson Hole, which will begin its work on Thursday, August 22. Investors expect to receive new signals regarding the expected reduction in the interest rate during the September meeting. At the moment, there is practically no doubt that the indicator will be adjusted, but the step remains uncertain – a quarter of a percentage point or half a point.

Meanwhile, the New Zealand dollar continues to be supported by the rhetoric of the Governor of the Reserve Bank of New Zealand, Adrian Orr, who has signaled to the market that he is ready to continue the easing of monetary stimulus. At the last meeting, the regulator cut the interest rate by 25 basis points for the first time since March 2020, highlighting the positive trend of slowing inflation to the range of 1.0–3.0%. According to officials, the rate will be 3.85% by the end of 2025 from the current 5.25%, while a Reuters poll published last Thursday showed that most economists expect borrowing costs to be cut by 50 basis points by the end of this year. However, the scenario with a systematic easing of monetary incentives was also confirmed by statistics, which recorded stable inflation rates in the country. Thus, the Q2 producer purchase prices index increased by 1.4% after 0.7% earlier, although analysts expected a slowdown in the dynamics to 0.5%, and the index of producer selling prices adjusted from 0.8% to 1.1%, significantly better than preliminary estimates of 0.6%. Local pressure on the position of the national currency was exerted by statistics on foreign trade. The July export volumes decreased from 6.17B New Zealand dollars to 6.15B New Zealand dollars, while imports increased from 5.45B New Zealand dollars to 7.11B New Zealand dollars, which led to a trade balance deficit of 963.0M New Zealand dollars, while the market expected a surplus of 331.0M New Zealand dollars.

Support and resistance

On the daily chart, Bollinger bands are showing confident growth: the price range is expanding but not as fast as the “bullish” sentiment develops. MACD maintains a strong buy signal located above the signal line. Stochastic is showing similar dynamics but is close to the highs, indicating that the New Zealand currency may become overbought in the ultra-short term.

Resistance levels: 0.6130, 0.6153, 0.6175, 0.6200.

Support levels: 0.6100, 0.6085, 0.6068, 0.6047.

Trading tips

Long positions may be opened after a breakout of 0.6130, with the target at 0.6200. Stop loss – 0.6100. Implementation period: 2–3 days.

Short positions may be opened from 0.6130 and a breakdown of 0.6100, with the target at 0.6047. Stop loss is 0.6130.