Current trend

The NZD/USD pair is showing a fairly active decline, developing a strong "bearish" impetus formed at the beginning of the week. The instrument is testing 0.6235 for a breakdown, while trading participants expect new movement drivers to emerge.

Today at 14:30 (GMT 2), data on the dynamics of jobless claims in the US will be published: a slight increase in Initial Jobless Claims for the week ended September 27 from 218.0 thousand to 220.0 thousand is expected, and Continuing Jobless Claims for the week ended September 20 will probably remain in the area of 1.834 million. At 16:00 (GMT 2), the Institute for Supply Management (ISM) will release its September business activity data: the S&P Global Composite PMI is expected to remain unchanged at 55.4 points, according to preliminary estimates, while the Services PMI could rise from 51.5 points to 51.7 points. Tomorrow at 14:30 (GMT 2), the US will present the final September labor market report: a slight decrease in Nonfarm Payrolls is forecast, from 142.0 thousand to 140.0 thousand, as well as a slowdown in Average Hourly Earnings in monthly terms from 0.4% to 0.3%, while the annual figure may remain unchanged at 3.8%.

Data from New Zealand had virtually no impact on the instrument's dynamics: the Australia and New Zealand Banking Group (ANZ) Commodity Price Index released today adjusted from 2.1% to 1.8% in September, which could increase pressure on the Reserve Bank of New Zealand (RBNZ) to further ease monetary policy. At the start of the week, the focus of investors was on the ANZ Business Confidence: in September, the indicator increased from 50.6 points to 60.9 points, and ANZ Activity Outlook was adjusted from 37.1% to 45.3%. Meanwhile, house prices in the country fell for the seventh month in a row, but at a slower pace after borrowing costs fell, losing only 0.5%, economists at CoreLogic NZ report. The dynamics confirm a decline in purchasing power against the backdrop of a slowing economy, as rising unemployment begins to affect household incomes. The situation could change if monetary authorities continue their dovish stance at their meeting on October 9. In particular, such steps have already contributed to a reduction in the average two-year mortgage rate below 6.0%.

Support and resistance

On the daily chart Bollinger Bands are trying to reverse horizontally. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic retains confident downward direction, but is quickly approaching its lows, indicating the risks of the NZ dollar being oversold in the ultra-short term.

Resistance levels: 0.6254, 0.6280, 0.6300, 0.6330.

Support levels: 0.6221, 0.6200, 0.6177, 0.6158.

Trading tips

Short positions may be opened after a breakdown of 0.6221 with the target at 0.6177. Stop-loss — 0.6254. Implementation time: 2-3 days.

A rebound from 0.6221 as from support followed by a breakout of 0.6254 may become a signal for opening new long positions with the target at 0.6300. Stop-loss — 0.6230.