The target range of inflation in New Zealand is 1-3 percent. Therefore, amid the current near-zero inflation, RBNZ tends to continue monetary policy easing to ensure sustainable economic growth in the country.
The NZD/USD pair gained support from strong NZ GDP data for the third quarter. The indicator grew by 0.9% against previous 0.3%. But as long as the Fed and RBNZ have different approaches to monetary policy, the pair is likely to decline in the medium term.
Support and resistance
The pair has grown by more than 700 points from its August lows and, at present, is trading at the key resistance level of 0.6860 (EMA200 on the daily chart and 23.6% Fibonacci).
If the level is broken out, a growth towards 0.7150 (upper border of an ascending channel) and 0.7240 (38.2% Fibonacci) might follow. OsMA and Stochastic on the daily, weekly and monthly charts recommend long positions.
However, on the 4-hour chart, the indicators have turned to short positions, and the price is at the upper border of an ascending correctional channel. Therefore, a decline is possible during which the support levels of 0.6760 (EMA144 on the daily chart), 0.6735 (EMA144 and the lower border on the 4-hour chart) and 0.6710 (EMA200) might be broken down.
Support levels: 0.6810, 0.6760, 0.6735, 0.6710, 0.6690.
Resistance levels: 0.6860, 0.7000.
Short positions can be opened below the level of 0.6850 with targets at 0.6800, 0.6770 and stop-loss at 0.6880.
Long positions can be opened above the level of 0.6900 with targets at 0.6960, 0.7000, 0.7080 and stop-loss at 0.6870.