Currency Pair of the Week: NZD/USD
There are many factors which could affect the direction of NZD/USD in the week .
New Zealand recently has been reporting zero, or nearly zero, new coronavirus cases daily! The country also moved its coronavirus alert right down to A level 1 from A level 2. that's amazing once you check out the speed of increase compared to another countries round the world, like the us . Note that the border remains closed to non-New Zealand residents. NZD/USD has taken this news as a sign to travel bid as traders feel the New Zealand economy will recover quicker than the US economy. we'll determine what the Royal Bank of latest Zealand (RBNZ) is thinking on Wednesday!
The RBNZ is predicted to go away rates unchanged at 0.25%, which is where rates are since they lowered them from 1% on March 15th. At the May 13th meeting, the RBNZ also raised the quantity in their Quantitative Easing Program from NZD 33 billion to NZD 60 billion. Economic data has been better than expected recently, for the foremost part, and traders are going to be watching the news conference afterwards for signs of cautious optimism from the financial institution . But given it's only been a month and a half since the last RBNZ meeting, the financial institution will presumably retain a dovish tone as Governor Orr recently said that negative rates are still on the table.
The US Dollar, on the opposite hand, has been moving lower. The US Federal Reserve System was extremely dovish at their last meeting. The Fed said they might continue buying Treasuries and MBS a minimum of at the present pace and most member of the FOMC saw rates near unchanged through 2022. additionally , the Fed announced that they might begin buying corporate bonds additionally to ETFs.
Technically, on the daily chart of NZD/USD, we will see that price bounced off their March 19th lows near .5469 and commenced trading during a sideways channel between .5843 and .6176 until the pair finally broke out on May 26th. The pair traded aggressively higher through the 200 Day Moving Average and saw horizontal resistance at .6593 on June 9th. NZD/USD had been consolidating during a pennant formation until TODAY when the pair broke higher above the downward sloping trendline. The target for the breakout from the pennant formation is near .7100. The consolidation also allowed for the RSI to unwind into neutral territory.
On a 240-minute timeframe, we get a far better check out the worth escape of the pennant formation. there's some short-term horizontal resistance near .6518, but the strong resistance is at the highest of Triangulum near .6584. Support comes in at the downward sloping trendline near .6430, where buyers are going to be waiting. Below there, support is at rock bottom trendline of Triangulum near .6380 then the 38.2 Fibonacci retracement level from the May 15th low to the June 9th high near .6330.
There are many factors which could affect the direction of NZD/USD in the week . These factors include the amount of latest coronavirus cases in New Zealand and therefore the US, the RBNZ meeting on Wednesday, and therefore the technical picture after the worth escape of the pennant formation. Keep an eye fixed on the RBNZ news conference also for clues on whether price will still target from the breakout of the pennant.