On Monday, the pair NZD/USD suddenly grew after continuous fall for the last 3 months and gained back almost half of the last week’s losses.
At the same time, an interest rate in New Zealand is expected to be reduced by 25 basis points to 3.0%, and by further 25 basis points before the end of the year.
An aggressive monetary policy easing by the RBNZ together with low dairy products prices, low inflation and the USD strengthening is putting the pair under the pressure.
Today, there are no important publications from New Zealand and the Pacific Ocean region. During the week, pay attention to the following releases: RBA Meeting’s Minutes on Tuesday, Consumer Price indices and RBA’s Governor Glenn Stevens speech on Wednesday, and the RBNZ decision on interest rates on Thursday.
Support and resistance
Despite the correction, the downtrend in the NZD/USD pair continues.
OsMA and Stochastic on the daily, weekly and monthly charts remain in the sell zone, while on the 4-hour chart give buy signals. This kind of indicator signals are given when there is an upward correction to the global downward trend.
The upward correction can develop up to 0.6625 (ЕМА50), 0.6705, 0.6760 (ЕМА144 on the 4-hour chart).
The fundamental factors significantly pressure the pair and any local strengthening should be viewed as an opportunity to open short positions. Short positions can be opened after the indicators give appropriate signals on the 4-hour chart.
Support levels: 0.6500, 0.6435, 0.6400.
Resistance levels: 0.6705, 0.6760, 0.6800, 0.6890.
Open short positions from the current levels and from 0.6690, 0.6625, 0.6600with targets at 0.6550, 0.6500, 0.6450, 0.6435, 0.6400 and stop-loss at 0.6775.
Long positions can be opened after the breakout of the level of 0.6890 with targets at 0.6900, 0.6950, 0.7000.