The NZD/USD pair has been trading within a narrow range for two weeks already, and today the volatility is likely to be extremely low. When Trade Balance statistics, released in New Zealand, indicated another increase in the trade deficit, the pair declined slightly but then returned to the opening levels.
Both the Fed and the RBNZ interest rate decisions are due on Wednesday. Most market participants suggest that neither of the Regulators will change its current monetary policy.
Nevertheless, in September, Graeme Wheeler, the Governor of the RBNZ, stated the readiness of the Regulator to cut further its interest rates. Given the current situation, export-oriented economy of New Zealand needs a lower rate of the national currency.
Support and resistance
The USD/NZD pair has strengthened from 0.6230 (year lows) to 0.6860 (23.6% Fibonacci) and now is trading at the lower border of an upward channel, close to the level of 0.6770, the breakdown of which may lead to a decline towards the support levels of 0.6650 (ЕМА144), 0.6615 (ЕМА200 on the 4-hour chart).
OsMA and Stochastic on the 4-hour chart indicate the current flat, while on the daily chart short positions are recommended.
As long as the price remains below the level of 0.6815 (ЕМА144), 0.6970 (ЕМА200 on the daily chart), it tends to continue its downward trend.
Support levels: 0.6770, 0.6650, 06615.
Resistance levels: 0.6815, 0.6860, 0.6970.
Long positions can be opened after the consolidation above the level of 0.6875 with targets at 0.6960, 0.7000 and stop-loss at 0.6830.
Short positions can be opened after the breakdown of the level of 0.6710 with targets at 0.6650, 0.6615 and stop-loss at 0.6740.