Current trend

The NZD/USD pair has been growing since the beginning of this month: earlier, the price tested the level of 0.6225 (Murray level [6/8]), but could not break above it, because it was under pressure from weak Chinese data, which caused experts to worry about a further slowdown in the growth of the second world economy. Thus, the producer price index dropped to -5.4%, which signals difficulties in selling products, and consumer inflation has not changed, indicating low domestic demand.

All this caused experts to fear that the growth of the world's second economy would slow down. Nevertheless, the potential for a further increase in the pair's quotes remains, as the market is awaiting the decision of the Reserve Bank of New Zealand (RBNZ) on the interest rate, which will be made on Wednesday. It is likely that the regulator will keep the value at the same level of 5.50%, interrupting the cycle of tightening monetary policy that began in October 2021, which, in turn, will be positively perceived by investors, since it will ease the pressure on the New Zealand economy, which is already in a state of recession. It should be noted that earlier RBNZ officials have already expressed confidence that next year inflation in the country will return to the target range of 1.0–3.0%, and then it is worth thinking about new measures of economic support.    

Unlike the New Zealand regulator, the further policy of the US Fed looks less certain, putting pressure on the position of the national currency. The US labor market in June showed signs of slowing down (employment growth was below forecasts and amounted to only 209.0K), which may act as a catalyst for continuing the pause in the "hawkish" course. Much will depend on the June inflation data, which will be presented tomorrow. It is expected that consumer prices will slow down again, but whether this will be enough to convince officials that there is no need for a new tightening of monetary conditions is still unclear.

Support and resistance

Now the price is close to 0.6225 (Murray level [6/8]), the breakout of which will allow the quotes to continue growing to the levels of 0.6286 (Murray level [7/8]) and 0.6347 (Murray level [8/8]). The key for the "bears" is the 0.6100 mark (Murray level [4/8]), consolidation below it may lead to a change in the current short-term uptrend and the price will return to the 0.5981 area (Murray level [2/8]).

Technical indicators allow for the possibility of further increase: the Bollinger Bands are directed upwards, the MACD histogram has moved into a positive zone, the Stochastic is horizontal at the overbought zone.

Resistance levels: 0.6225, 0.6286, 0.6347.

Support levels: 0.6100, 0.6042, 0.5981.

Trading tips

Long positions can be opened above 0.6225 with targets at 0.6286, 0.6347 and stop-loss in the area of 0.6185. Implementation period: 5-7 days.

Short positions should be opened below 0.6100 with targets at 0.6042, 0.5981 and stop-loss in the area of 0.6130.