Current trend

The NZD/USD pair is moving within a short-term downward trend, testing the level of 0.6075 (50.0% Fibonacci correction) under pressure from the Q3 inflation data.

Thus, the consumer price index corrected from 0.4% to 0.7% QoQ and from 3.3% to 2.2% YoY, returning to the target range of the Reserve Bank of New Zealand (2.0–3.0%) for the first time in more than three years. It increases the likelihood of maintaining the monetary easing pace. Most experts believe the regulator will cut the interest rate by another 50 basis points in November.

Meanwhile, the US labor market is recovering (unemployment fell to 4.1%, and the employment rate grew by 254.0K), and inflation is weakening, amounting to 2.4% in September instead of the expected 2.3%. In these conditions, US Fed officials may take a cautious position. Yesterday, the regulator’s representative Christopher Waller said the economy was developing faster than desired, so it is better to slow the interest rate cut pace.

In general, against monetary factors, a decline in the NZD/USD pair in the medium term is very likely.

Support and resistance

The trading instrument is testing 0.6075 (Fibonacci correction 50.0%). After a breakdown, it may fall to 0.5981 (Murrey level [2/8]) and 0.5920 (Murrey level [1/8]). In case of a breakout of the Bollinger Bands’ midline 0.6225 (Murrey level [6/8], Fibonacci correction 23.6%), growth to the area of ​​0.6347 (Murrey level [8/8]) and 0.6408 (Murrey level [ 1/8]) may follow.

Technical indicators confirm the formation of a downward trend: Bollinger Bands are reversing downwards, and the MACD histogram is increasing in the negative zone. The exit of Stochastic from the oversold zone does not exclude a limited correction.

Resistance levels: 0.6225, 0.6347, 0.6408.

Support levels: 0.6075, 0.5981, 0.5920.

Trading tips

Short positions may be opened below 0.6075, with the targets at 0.5981, 0.5920, and stop loss 0.6140. Implementation period: 5–7 days.

Long positions may be opened above 0.6225, with the targets at 0.6347, 0.6408, and stop loss 0.6190.