Current trend

The NZD/USD rate rose to a December 2023 high of 0.6350 after the publication of poor US macroeconomic data and the Reserve Bank of Australia (RBA) officials kept the interest rate at 4.35%. The regulator’s “hawkish” monetary policy supports both the Australian dollar and the New Zealand currency, as the two instruments are in the same trading zone and are linked to each other strongly.

However, the Reserve Bank of New Zealand already began to reduce borrowing costs in August but given the RBA’s decision, it may also leave the rate unchanged at its next meeting on October 9, allowing the New Zealand dollar to strengthen its positions. On Monday, investors assessed statistics on foreign trade. The August exports from New Zealand changed from 6.09B dollars to 4.97B dollars, and imports – from 7.10B dollars to 7.17B dollars, which led to an increase in the trade deficit from –1.016B dollars to –2.203B dollars. The Conference Board consumer confidence index for the same period was 98.7 points, significantly lower than expectations of 103.9 points and the previous value of 105.6 points. Earlier, market participants paid attention to preliminary September data on business activity. Manufacturing PMI fell from 47.9 points to 47.0 points instead of 48.6 points, the services PMI from 55.7 points to 55.4 points compared to forecasts of 55.3 points, and the composite PMI from 54.6 points to 54.4 points, although experts expected 54.3 points. The national economy maintains significant growth rates, increasing the likelihood of further easing of the US Fed’s monetary policy. In addition, Minneapolis Federal Reserve Bank President Neel Kashkari previously noted that cutting the interest rate by 50 basis points was the right decision amid significant progress in the fight against inflation and unemployment.

The long-term trend is upward. Yesterday the trading instrument broke through the resistance level of 0.6270, and today it reached 0.6350. After a breakout, the trend may reach the 2023 high of 0.6530. If the resistance level of 0.6350 is maintained, a downward correction will begin, with the targets of 0.6257, 0.6185, and 0.6130. The RSI (14) indicator has reached the overbought zone, and a divergence has formed on the charts, indicating the likely development of a correction in the medium term, limiting the possibility of new purchases.

Within the medium-term uptrend, all targets for long positions were achieved. The quotes renewed the August high of 0.6299, broke zone 3 (0.6283–0.6269), and headed towards zone 4 (0.6423–0.6409). Now, the asset is retreating from recent highs and may reach the trend support area of ​​0.6215–0.6201, after which long positions, with the target at the current week’s high of 0.6355 are relevant.

Support and resistance

Resistance levels: 0.6350, 0.6530.

Support levels: 0.6257, 0.6185, 0.6130.

Trading tips

Long positions may be opened from 0.6257, with the target at 0.6350 and stop loss 0.6225. Implementation period: 7–9 days.

Short positions may be opened below 0.6225, with the target at 0.6130 and stop loss 0.6270.