Daily Analysis For NZD/USD  19-06-2023

Daily Analysis For NZD/USD 19-06-2023

NZD/USD Analysis


Key Points: -

·       The NZD/USD pair encountered selling pressure, putting an end to its four-day winning streak and reaching a monthly high.


·       The US Dollar benefited from the Federal Reserve's hawkish outlook, coupled with a more cautious market sentiment, which exerted downward pressure on the pair.


·       Investors are now eagerly awaiting Fed Chair Jerome Powell's testimony later this week, hoping for new catalysts to drive market direction.


Today's Scenario: -


The NZD/USD pair faced selling pressure around the 0.6235 level on Monday, leading to a decline throughout the Asian session and breaking its four-day winning streak. The pair retreated from Friday's monthly high and reached a fresh daily low near the 0.6200 round-figure mark.


The US Dollar (USD) gained some positive momentum for the second consecutive day following the Federal Reserve's (Fed) hawkish outlook. The Fed decided to keep interest rates unchanged last week but hinted at the possibility of raising borrowing costs by up to 50 basis points by the end of the year. Additionally, a generally cautious sentiment in the equity markets favored the safe-haven appeal of the USD, resulting in capital outflows from the risk-sensitive New Zealand Dollar (NZD).


Concerns about a potential global economic slowdown, particularly in China, overshadowed hopes for further rate cuts by the People's Bank of China (PBoC), adding to the downward pressure on market sentiment. Furthermore, the Reserve Bank of New Zealand (RBNZ) signaled that it has completed its most aggressive tightening cycle since 1999, which weakened the NZD. However, expectations that the Fed is approaching the end of its year-long tightening policy could limit USD gains and help contain losses for the NZD/USD pair.


Traders may adopt a cautious approach and refrain from taking aggressive positions ahead of Fed Chair Jerome Powell's two-day congressional testimony scheduled for Wednesday and Thursday. Investors will closely watch Powell's remarks for insights into the future path of interest rate hikes by the Fed, which will play a crucial role in shaping the short-term dynamics of the USD and provide significant impetus to the NZD/USD pair. Therefore, it is advisable to wait for strong and sustained selling pressure before confirming the exhaustion of the recent upward move witnessed over the past few weeks.


Diagram of NZD/USD: -


Economic Events: -


Date      Event                                                                                                             Impact       Currency

 04:00   (New Zealand) Services NZ PSI                                                                         Low     NZD

 04:00   (New Zealand) Composite NZ PCI                                                     Low    NZD

 05:30   (United States) Juneteenth                                                                            None     USD

 09:05   (Japan) 52-Week Bill Auction                                                                           Low     JPY

 13:30   (Australia) Myfxbook AUDUSD Sentiment                                 Medium AUD

 13:30   (Switzerland) Myfxbook USDCHF Sentiment                              Medium CHF

 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

 13:30   (Euro Area) ECB Survey of Monetary Analysts                                                Low  EUR

 15:00   (Germany) 12-Month Bubill Auction                                                               Low    EUR

 16:00   (Portugal) Current Account                                                                              Low     EUR

 16:30   (Euro Area) ECB Lane Speech                                                                           Low     EUR

 17:10   (Euro Area) ECB Schnabel Speech                                                     Low    EUR

 18:00   (Canada) PPI YoY                                                                                Low       CAD

 18:00   (Canada) PPI MoM                                                                                           Low       CAD

 18:00   (Canada) Raw Materials Prices YoY                                                   Low    CAD

 18:00   (Canada) Raw Materials Prices MoM                                                              Low    CAD

 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

 19:30   (United States) NAHB Housing Market Index                              Medium USD

 23:30   (Euro Area) ECB Guindos Speech                                                      High   EUR



Buy Scenario: -


For the NZD/USD pair, it is important to stay above the pivot level at $0.6223 in order to target the First Major Resistance Level (R1) at $0.6238. If the pair manages to surpass Friday's high at $0.6247, it would indicate a bullish session. However, a bullish scenario would require supportive market risk sentiment.


In the event of a breakout session, the next target for the Kiwi would likely be the Second Major Resistance Level (R2) at $0.6265. If the bullish momentum continues, the Third Major Resistance Level (R3) comes into play at $0.6280. Till we do not advise to buy NZD/USD.


Sell Scenario: -


On the downside, a drop below the pivot level would bring the First Major Support Level (S1) at $0.6196 into consideration. However, unless there is a significant risk-off sentiment driving selling pressure, the NZD/USD pair should manage to stay above $0.62 and avoid reaching the Second Major Support Level (S2) at $0.6182.


The Third Major Support Level (S3) is located at $0.6155. Till we do not advise to sell NZD/USD.


Support and Resistance Level: -

 Support              Resistance  

 S1 0.6196  -      R1 0.6238

 S2 0.6182  -      R2 0.6265

 S3 0.6155  -      R3 0.6280


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