The Reserve Bank of New Zealand's less Hawkish statement prompted speculation of a potential interest rate cut later in the year, contingent upon inflationary pressures easing. In response to the Committee's statement, the NZD/USD exchange rate dipped below the moving average line, signaling bearish pressure. Traders are expected to monitor the currency pair in light of the upcoming release of significant economic data that could potentially impact currency valuations.
Overview
The Reserve Bank of New Zealand's less Hawkish statement prompted speculation of a potential interest rate cut later in the year, contingent upon inflationary pressures easing. In response to the Committee's statement, the NZD/USD exchange rate dipped below the moving average line, signaling bearish pressure. Traders are expected to monitor the currency pair in light of the upcoming release of significant economic data that could potentially impact currency valuations.
Upcoming High Impact Economic Events
Wednesday 02:00 pm (GMT+0): RBNZ Rate Statement (NZD)
Thursday 06:00 am (GMT+0): GDP m/m(GBP)
Thursday 12:30 pm (GMT+0): Core CPI m/m (USD)
Thursday 12:30 pm (GMT+0): CPI m/m (USD)
Thursday 12:30 pm (GMT+0): CPI y/y (USD)
Thursday 12:30 pm (GMT+0): Unemployment Claims (USD)
Friday 12:30 pm (GMT+0): Core PPI m/m (USD)
Friday 12:30 pm (GMT+0): PPI m/m (USD)
Friday 02:00 pm (GMT+0): Prelim UoM Consumer Sentiment (USD)
Technical Analysis
The NZDUSD has been trending upward since April 19, when it rebounded from the support area of 0.58520. The Kiwi formed a series of successively higher tops and higher bottoms, rising above the Moving Average (MA) line, only to register June's highest exchange rate at 0.62219 on June 12. Subsequently, the formation of a bearish reversal, known in technical analysis as a non-failure swing, pushed the exchange rate lower, below the MA, thus opening the way for a downtrend. Both the 50-period Exponential Moving Average (EMA) and the Momentum oscillator support the bearish outlook. Specifically, prices are trading below the EMA, and the Momentum oscillator registers values below the 100 baseline.
Potential Upside Targets
If the bulls manage to take control of the market, traders may consider the following three potential upside targets:
0.61537: The initial price objective is seen at 0.61537, corresponding to the peak formed on July 8.
0.62219: The second price objective is 0.62219, aligning with the highest exchange rate reached in June.
0.63692: An additional resistance level is determined at 0.63692, representing a peak formed on the weekly timeframe.
Potential Downside Targets
If the bears manage to maintain control of the market, traders may find potential opportunities in the following four downside targets:
0.60258: The initial downside target is set at 0.60258, corresponding to the 161.8 percent Fibonacci Extension drawn from the trough to the peak of the non-failure swing reversal pattern.
0.59930: The second level of support is estimated at 0.59930, representing the 0.618 percent Fibonacci Retracement of the upward movement.
0.59046: The third line of support is calculated at 0.59046, corresponding to the 261.8 percent Fibonacci Extension of the non-failure swing.
0.58520: An additional line of support is estimated at 0.58520, representing the daily low marked on April 19.
Conclusion
In conclusion, the exchange rate of New Zealand versus the US Dollar dipped below the 50-period Moving Average in response to the Committee's less Hawkish statement, which sparked discussions of a possible rate cut before the end of the year. The current negative momentum indicates a potential drop in exchange rates, highlighting the importance of carefully monitoring and managing risks in the currency market. Moreover, keeping up-to-date with economic events and geopolitical changes will be crucial in making informed trading choices in financial markets.