Published on Jun 19, 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.