Current trend

After an unsuccessful attempt to break through the resistance level of 0.6120, the NZD/USD pair is declining, trading around 0.6070, under pressure from sellers after the publication of inflation data last week. In the third quarter, the consumer price index (CPI) added 0.6% after 0.4% over the previous period, with a forecast of 0.7%, and YoY, the indicator was 2.2% after 3.3% in the previous quarter, approaching the target of 2.0%. Against this background, the Reserve Bank of New Zealand (RBNZ) may resort to another reduction in the cost of borrowing in November, which leads to sales of the national currency.

In turn, the US dollar in the USDX rose by 0.56% last week, and by 2.79% since the beginning of October after the publication of data that indicated the stability of the national economy and lowered expectations regarding the rapid easing of the monetary parameters of the US Federal Reserve at the next meeting. In addition, the core retail sales index increased by 0.5% in September, with a forecast of 0.1%, and retail sales increased by 0.4%, also exceeding expectations at 0.3%. The current estimate of real gross domestic product (GDP) GDPNow growth from the Atlanta Federal Reserve Bank (FRB) in the third quarter was 3.4%, while analysts expected 3.2%, but industrial production in September decreased by 0.3% with preliminary estimates of -0.1%. Additionally, the strengthening of the dollar is influenced by geopolitical instability in the Middle East and the upcoming US presidential elections on November 5.

Support and resistance

The long-term trend remains upward: the border shifts to the support level of 0.5980, and the instrument adjusts downwards. On October 9, the support level of 0.6105 was broken through as part of the correction and now the nearest resistance is 0.6120. If market participants test this level as part of the pullback, it will be possible to consider corrective sales with a target of 0.5980, and in case of a breakout, purchases to the level of 0.6220 will be relevant.

The medium-term trend is downward. In early October, the target zone 2 (0.6099–0.6085) was reached, which was broken through last week. Now the target for sales within the trend is target zone 3 (0.5959–0.5945), and the key resistance is shifting to 0.6193–0.6179. If the price reaches this zone as part of the correction, new sales with a target of 0.6040 will be relevant.

Resistance levels: 0.6120, 0.6220, 0.6300.

Support levels: 0.5980, 0.5860.

Trading tips

Short positions can be opened from the 0.6120 mark with a target of 0.5980 and a stop-loss of 0.6150. Implementation time: 7-9 days.

Long positions can be opened above the level of 0.6150 with a target of 0.6220 and a stop-loss of 0.6120.