Current trend

Last week, the NZD/USD pair reached six-month highs around 0.6410 and started a correction.

The New Zealand dollar is under pressure from Q2 poor data from China: the gross domestic product (GDP) increased by 6.3% against the forecast of 7.3%, amplifying the risks of a global economic downturn. However, the quotes may recover after the publication of inflation data in New Zealand tomorrow at 00:45 (GMT 2): according to experts, the consumer price index will decrease from 1.2% to 1.0% QoQ and from 6.7% to 5.9% YoY. The implementation of the forecast will confirm the recovery of the national economy, allowing the Reserve Bank of New Zealand (RBNZ) to keep the interest rate at 5.50%.

Further dynamics of the US dollar depend on the decisions of the US Federal Reserve, which will be taken next week but whether the officials would prefer to increase the cost of borrowing again or decide to leave the monetary policy unchanged is still unknown.

Support and resistance

The trading instrument is ready to return to the previously abandoned downward channel and is close to 0.6286 (Murrey level [7/8]), the breakdown of which will allow it to fall to the middle line of Bollinger Bands (0.6200) or 0.6103 (Murrey level [4/8]). The key “bullish” level is 0.6347 (Murrey level [8/8]), after the breakout of which the upward dynamics may continue to 0.6408 (Murrey level [ 1/8]) and 0.6469 (Murrey level [ 2/8]).

Technical indicators do not give a single signal: Bollinger bands are reversing downwards but the MACD histogram is decreasing in the positive zone, while Stochastic has reversed downwards and leaves the overbought zone.

Resistance levels: 0.6347, 0.6408, 0.6469.

Support levels: 0.6286, 0.6200, 0.6103.

Trading tips

Short positions should be opened below 0.6286 with the targets at 0.6200, 0.6103, and stop loss around 0.6330. Implementation period: 5–7 days.

Long positions may be opened above 0.6347 with the targets at 0.6408, 0.6469 and stop loss around 0.6300.