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NZD/USD Sets New Lows as Economic Sentiment Deteriorates in New Zealand

NZD/USD Sets New Lows as Economic Sentiment Deteriorates in New Zealand

Tuesday Market Overview:

The New Zealand dollar has weakened significantly following a sharp decline in Q2 economic confidence. This decline puts additional pressure on the NZD/USD pair. Simultaneously, rising US Treasury yields are bolstering the dollar. This creates a challenging environment for the kiwi. Expectations that the European Central Bank (ECB) might initiate rate cuts before the US Federal Reserve further support the dollar’s dominance over major currencies.

Technical Analysis:

On the four-hour chart, the NZD/USD pair is entrenched in a downtrend, trading below the 100 and 34-period moving averages. Seller dominance in Tuesday morning’s session led to a break below the key support at 0.60569, paving the way for further declines. If the bearish momentum continues, the immediate price target is 0.60433. Continued downward pressure beyond this critical support could expose targets at 0.60228 and 0.60069.

Alternative Scenario:

If buyers re-enter the market, they need to reclaim the former support turned resistance at 0.60569. They must then push the price above the 34-period moving average near 0.60760 to remain in charge. Ultimately, only a break above the 100-period moving average resistance at 0.61069 would signal a potential end to the current downtrend.

Market Overview and Key Levels

Resistance Levels:

– Resistance 3: 0.61069

– Resistance 2: 0.60760

– Resistance 1: 0.60569

Current Price (at the time of analysis): 0.60493

Support Levels:

– Support 1: 0.60433

– Support 2: 0.60228

– Support 3: 0.60069

Impactful Events:

This week, the US economic calendar is packed, while New Zealand lacks significant events, making US news the primary driver for NZD/USD volatility. Key events include the US job openings report and a speech by Federal Reserve Chairman Jerome Powell, both occurring on Tuesday, which could significantly impact the dollar.

Oscillators and Risk Warnings:

– RSI (Relative Strength Index): Bearish, indicating continued selling pressure.

– MACD (Moving Average Convergence Divergence): Bearish, supporting the downward trend.

– Moving Averages: Bearish, reflecting the current negative price action.

Conclusion:

The NZD/USD pair is facing significant downward pressure due to declining business confidence in New Zealand and rising US Treasury yields. Traders should closely monitor the upcoming US job openings report and Jerome Powell’s speech. These events will provide crucial insights into market sentiment and potential price movements.

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