Daily Analysis For NZD/USD  16-06-2023

Daily Analysis For NZD/USD 16-06-2023

NZD/USD Analysis


Key Points: -

·       NZD/USD pair displays relentless upward momentum, reaching a level not seen in almost four weeks.


·       The ongoing bearish sentiment surrounding the USD, driven by dovish Fed expectations, plays a supporting role in this ascent.


·       Moreover, the risk-on sentiment prevailing in the market exerts additional pressure on the weakening greenback, thereby favoring the Kiwi, which is known for its responsiveness to risk factors.


Today's Scenario: -


The NZD/USD pair continues its upward movement, which started at the beginning of the current month, and reaches a high that hasn't been seen in over three weeks on Friday. It maintains a positive sentiment, slightly below the mid-0.6200s range as the European session approaches, and has now successfully crossed above a significant technical indicator, the 200-day Simple Moving Average (SMA).


The US Dollar (USD) struggles to recover and remains at a five-week low, contributing to the NZD/USD pair's strength. Despite the Federal Reserve's (Fed) indication that interest rates may need to rise by up to 50 basis points by the end of the year, investors believe that the central bank is nearing the peak of its tightening cycle. Additionally, lackluster US macro data from Thursday raises concerns about how much room the Fed has to continue raising rates, further undermining the US currency.


Furthermore, the positive sentiment prevailing in the equity markets adds pressure on the safe-haven US Dollar and benefits the risk-sensitive New Zealand Dollar (Kiwi). However, worries about a global economic downturn, especially in China, may limit optimism. Moreover, a slight increase in US Treasury bond yields might curb the USD's losses. The Reserve Bank of New Zealand's (RBNZ) clear indication that it has concluded its most aggressive rate-hiking cycle since 1999, coupled with a technical recession in New Zealand, could also deter bullish positions on the NZD/USD pair.


Nevertheless, spot prices are on track to record substantial weekly gains and secure their third consecutive week in positive territory. With no significant US economic releases, traders on Friday will look to Governor Christopher Waller's public appearance during the early North American session for guidance. The direction of US bond yields will also influence USD price dynamics and provide some momentum for the NZD/USD pair. Additionally, overall market sentiment may create short-term trading opportunities on the final day of the week.


Diagram of NZD/USD: -


Economic Events: -


Date      Event                                                                                                           Impact         Currency

 01:30   (United States) Foreign Bond Investment                                        Low  USD

 01:30   (United States) Net Long-term TIC Flows                                                 Medium   USD

 01:30   (United States) Overall Net Capital Flows                                         Low  USD

 04:00   (New Zealand) Business NZ PMI                                                              Medium     NZD

 08:30   (Japan) BoJ Interest Rate Decision                                                   High    JPY

 12:30   (Austria) Inflation Rate MoM                                                                           Low     EUR

 12:30   (Austria) Inflation Rate YoY                                                                              Low     EUR

 12:30   (Austria) Harmonised Inflation Rate YoY                                                         Low    EUR

 12:30   (Austria) Harmonised Inflation Rate MoM                                       Low  EUR

 12:30   (Austria) CPI                                                                                                     High        EUR

 12:30   (Slovakia) Harmonised Inflation Rate YoY                                         Low  EUR

 12:30   (Slovakia) Harmonised Inflation Rate MoM                                     Low  EUR

 12:30   (United States) Fed Bullard Speech                                            Medium   USD

 13:30   (European Union) ECOFIN Meeting                                            Medium   EUR

 13:30   (Italy) Inflation Rate YoY                                                                           Medium      EUR

 13:30   (Italy) Harmonised Inflation Rate MoM                                                          Low    EUR

 13:30   (Italy) Harmonised Inflation Rate YoY                                                             Low    EUR

 13:30   (Italy) Inflation Rate MoM                                                                  Low     EUR

 13:30   (Italy) CPI                                                                                                           High       EUR

 14:30   (Euro Area) Inflation Rate MoM                                                                      Low     EUR

 14:30   (Euro Area) Core Inflation Rate YoY                                                   Low    EUR

 14:30   (Euro Area) Inflation Rate YoY                                                                   Medium    EUR

 14:30   (Euro Area) Labour Cost Index YoY                                                    Low   EUR

 14:30   (Euro Area) Wage Growth YoY                                                                         Low     EUR

 14:30   (Euro Area) CPI                                                                                                 High       EUR

 14:30   (Malta) Inflation Rate YoY                                                                  Low     EUR

 15:30   (Portugal) PPI YoY                                                                                             Low       EUR

 15:30   (Portugal) PPI MoM                                                                                         Low       EUR

 17:15   (United States) Fed Waller Speech                                            Medium   USD

 18:00   (Canada) Foreign Securities Purchases                                                            Low   CAD

 18:00   (Canada) Foreign Securities Purchases by Canadians                       Low CAD

 18:00   (Canada) Wholesale Sales MoM                                                                      Low     CAD

 19:30   (United States) Michigan Consumer Sentiment                                              High USD

 19:30   (United States) Michigan Inflation Expectations                                             Low  USD

 19:30   (United States) Michigan Current Conditions                                     Low  USD

 19:30   (United States) Michigan 5 Year Inflation Expectations                                 Low USD

 19:30   (United States) Michigan Consumer Expectations                           Low USD

 22:30   (United States) Baker Hughes Oil Rig Count                                     Low  USD

 22:30   (United States) Baker Hughes Total Rig Count                                                Low  USD



Buy Scenario: -


On the upside, if NZD/USD buyers manage to surpass the latest peak of 0.6250, they could target the 23.6% Fibonacci retracement level around 0.6300.


However, the Kiwi pair buyers will face significant challenges beyond that, as they attempt to break through a 4.5-month-old resistance line near 0.6330 and a horizontal area ranging from 0.6385 to 0.6390, which has acted as a barrier since early February. Till we do not advise to buy NZD/USD.


Sell Scenario: -


Nevertheless, intraday traders can find support for the NZD/USD price around the 100-day moving average (DMA) at approximately 0.6220. Additionally, the bullish signals from the MACD indicator reinforce the significance of this level. A breach of this support could quickly push the quote towards the 38.2% Fibonacci retracement level of the upside movement from October 2022 to February 2023, near 0.6150.


Subsequently, the focus will shift to the resistance-turned-support line that extends from early May, currently around 0.6120.


If the NZD/USD drops below the 0.6120 support, there is a possibility of a southward move towards the previous monthly low of approximately 0.5985. Till we do not advise to sell NZD/USD.


Support and Resistance Level: -

 Support              Resistance  

 S1 0.6131   -     R1 0.6299

 S2 0.6019  -      R2 0.6356

 S3 0.5963  -      R3 0.6467


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