Daily Analysis For NZD/USD  12-06-2023

Daily Analysis For NZD/USD 12-06-2023

NZD/USD Analysis


Key Points: -

·       The NZD/USD pair maintains stability above the 0.6100 level, although its upward potential is limited by a slight strength in the US Dollar (USD).


·       The modest strength in the USD is being supported by an intraday increase in US bond yields, which acts as a headwind for the pair.


·       Additionally, traders appear hesitant to take significant positions ahead of the release of US Consumer Price Index (CPI) data on Tuesday and the Federal Open Market Committee (FOMC) meeting on Wednesday.

Today's Scenario: -


The NZD/USD pair is facing difficulties in extending its recent gains as it remains confined to a narrow range just above the 0.6100 level as the European session begins on Monday.


The US Dollar (USD) has strengthened for the second consecutive day, preventing the NZD/USD pair from surpassing its two-and-a-half-week high around the 0.6135-0.6140 region reached on Friday. The USD's modest rise in Treasury bond yields is providing support. However, uncertainty surrounding the Federal Reserve's (Fed) rate hike plans is limiting significant upside for the USD and offering some support to the NZD/USD pair.


Recent comments from several Fed officials have increased expectations of a potential pause in the central bank's rate hike cycle. Nevertheless, surprise rate hikes by the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) last week indicate that the fight against inflation is ongoing. This reinforces the possibility of further tightening by the Fed and maintains expectations of another 25 basis points rate increase in July.


Therefore, the focus will be on the release of the latest US consumer inflation data on Tuesday, followed by the outcome of the highly-anticipated two-day FOMC monetary policy meeting on Wednesday. Investors will seek new insights into the Fed's short-term policy outlook, which will play a crucial role in influencing the dynamics of the USD and determine the next direction for the NZD/USD pair.


Additionally, concerns about a global economic slowdown, particularly in China, could pose challenges for commodity-linked currencies, including the New Zealand Dollar (NZD), in the absence of any significant economic releases from the US. Furthermore, the Reserve Bank of New Zealand (RBNZ) signaling the end of its most aggressive rate hiking cycle since 1999 warrants caution before anticipating further appreciation in the NZD/USD pair.


Diagram of NZD/USD: -

Economic Events: -


Date      Event                                                                                        Impact             Currency

4:15      (New Zealand) Electronic Retail Card Spending YoY    Low     NZD

4:15      (New Zealand) Electronic Retail Card Spending MoM  Low     NZD

5:20      (Japan) PPI YoY                                                                            Low             JPY

5:20      (Japan) PPI MoM                                                            Low           JPY

5:31      (Ireland) Construction PMI                                             Low          EUR

10:30    (Finland) Current Account                                             Low          EUR

11:30    (Japan) Machine Tool Orders YoY                                Low         JPY

12:30    (Slovakia) Construction Output YoY                              Low         EUR

13:30    (China) Total Social Financing                                                    Low           CNY

13:30    (China) New Yuan Loans                                                          Low CNY

13:30    (China) M2 Money Supply YoY                                                   Low           CNY

13:30    (China) Outstanding Loan Growth YoY                                      Low          CNY

13:30    (Switzerland) Myfxbook USDCHF Sentiment      Medium         CHF

13:30    (Australia) Myfxbook AUDUSD Sentiment         Medium         AUD

13:30    (Japan) Myfxbook USDJPY Sentiment                               Medium          JPY

13:30    (European Union) Myfxbook EURUSD Sentiment            Medium         EUR

13:30    (United Kingdom) Myfxbook GBPUSD Sentiment            Medium         GBP

13:30    (Canada) Myfxbook USDCAD Sentiment                          Medium           CAD

13:30    (New Zealand) Myfxbook NZDUSD Sentiment                 Medium         NZD

15:15    (European Union) EU Bond Auction                             Low          EUR

15:15    (European Union) 15-Year Bond Auction                                  Low          EUR

18:30    (Ecuador) Balance of Trade                                                       Low            USD

18:30    (France) 3-Month BTF Auction                                                 Low            EUR

18:30    (France) 12-Month BTF Auction                                               Low            EUR

18:30    (France) 6-Month BTF Auction                                                 Low            EUR

20:30    (Kosovo) Inflation Rate YoY                                                       Low            EUR

20:30    (United States) Consumer Inflation Expectations                    Low         USD

21:00    (United States) 6-Month Bill Auction                                        Low          USD

21:00    (United States) 3-Year Note Auction                                         Low          USD

22:30    (United States) 3-Month Bill Auction                                        Low          USD

22:30    (United States) 10-Year Note Auction                                       Low          USD

23:30    (United States) Monthly Budget Statement       Medium        USD



Buy Scenario: -


The NZD/USD pair has experienced a slight decline after rising earlier in the day, consolidating its losses. It currently trades around 0.6135 during early Monday trading. The pair faced resistance from a descending trendline that has been in place for the past month, as well as from the overbought condition indicated by the 14-day Relative Strength Index (RSI).


To further validate the upward movement, the NZD/USD pair would need to surpass the 200-day Simple Moving Average (SMA) obstacle around 0.6175. If successful, the focus would shift to the highs recorded in late May around 0.6305. Till we do not advise to buy NZD/USD.


Sell Scenario: -


On the downside, there is support from an ascending trendline starting from last Wednesday, which currently sits near 0.6120. Additionally, the 100-bar SMA near 0.6100 acts as a barrier to further declines.


If the pair falls below the 0.6100 level, the last line of defense for the bears would be an ascending trendline from May 31, which is currently around 0.6040. Till we do not advise to sell NZD/USD.


Support and Resistance Level: -

 Support               Resistance  

 S1 0.6103    -      R1 0.6163

 S2 0.6064   -       R2 0.6183

 S3 0.6044   -       R3 0.6222



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