Daily Analysis For NZD/USD 25-05-2023

Daily Analysis For NZD/USD 25-05-2023

NZD/USD Analysis
Key Points
• The NZD/USD pair has experienced a significant decline, falling below the 0.6100 level, mainly due to the Reserve Bank of New Zealand (RBNZ) signaling a pause in further rate hikes in the near future. This stance has affected the New Zealand dollar negatively.
• US Dollar Index has reached a new 10-week high at 103.99, primarily driven by the delay in resolving the US debt-ceiling issues. The uncertainty surrounding the US debt ceiling has led to a stronger US dollar.
• The RBNZ believes that it has already surpassed its previous consideration for the peak interest rate, suggesting that no further rate hikes are imminent. This stance has impacted the NZD/USD pair's performance.
Today's Scenario: - During the Tokyo session, the NZD/USD pair has experienced a sharp decline, breaking below the significant support level of 0.6100. This downward movement was primarily triggered by comments made by Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr, highlighting the potential downsides of pushing interest rates beyond what was previously considered a neutral level.
In early Asian trading, S&P 500 futures have reduced some of their initial gains. Market sentiment overall remains cautious as the United States economy approaches a critical situation with the possibility of default. US Treasury Secretary Janet Yellen has consistently been warning the White House that funds could run out by June 01 if the borrowing limit remains unchanged.
Diagram of NZD/USD
NZD/USD
Economic Events and Scenario for NZD/USD
Economic Events : -
GMTEventImpactCurrency
00:01(United Kingdom) Car Production YoYLowGBP
00:50(Japan) Foreign Bond InvestmentLowJPY
00:50(Japan) Stock Investment by ForeignersLowJPY
01:00(Australia) RBA Payments System Board MeetingLowAUD
04:35(Japan) 40-Year JGB AuctionLowJPY
07:00(Germany) GDP Growth Rate QoQMediumEUR
07:00(Germany) GDP Growth Rate YoYMediumEUR
07:00(Germany) GfK Consumer ConfidenceHighEUR
07:45(France) Business ConfidenceMediumEUR
07:45(France) Business Climate IndicatorLowEUR
08:00(Spain) PPI YoYLowEUR
09:30(Slovenia) Tourist Arrivals YoYLowEUR
09:30(Slovenia) Business ConfidenceLowEUR
10:00(Euro Area) ECB Annual Report 2022LowEUR
10:00(Euro Area) ECB Guindos SpeechHighEUR
10:10(Italy) BTP Short TermLowEUR
11:00(United Kingdom) CBI Distributive TradesMediumGBP
11:00(Latvia) Unemployment RateLowEUR
12:00(Canada) CFIB Business BarometerLowCAD
13:30(Canada) Manufacturing Sales MoMLowCAD
13:30(United States) Jobless Claims 4-week AverageHighUSD
13:30(United States) Continuing Jobless ClaimsHighUSD
13:30(United States) Initial Jobless ClaimsHighUSD
13:30(United States) Chicago Fed National Activity IndexMediumUSD
13:30(United States) Real Consumer Spending QoQLowUSD
13:30(United States) GDP Sales QoQLowUSD
13:30(United States) Core PCE Prices QoQLowUSD
13:30(United States) PCE Prices QoQLowUSD
13:30(United States) GDP Price Index QoQMediumUSD
13:30(United States) Corporate Profits QoQMediumUSD
13:30(United States) GDP Growth Rate QoQMediumUSD
13:30(Canada) Average Weekly Earnings YoYLowCAD
15:00(United States) Pending Home Sales YoYMediumUSD
15:00(United States) Pending Home Sales MoMMediumUSD
15:30(United States) EIA Natural Gas Stocks ChangeLowUSD
15:30(United States) Fed Collins SpeechMediumUSD
16:00(United States) Kansas Fed Composite IndexLowUSD
16:00(United States) Kansas Fed Manufacturing IndexLowUSD
16:30(United States) 8-Week Bill AuctionLowUSD
16:30(United States) 4-Week Bill AuctionLowUSD
17:30(United Kingdom) BoE Haskel SpeechLowGBP
18:00(United States) 7-Year Note AuctionLowUSD
23:00(New Zealand) ANZ Roy Morgan Consumer ConfidenceLowNZD
Buy Scenario: - Any corrective bounce in NZD/USD pair above the previous support line originating from March, which now serves as immediate resistance around 0.6130, could attract short-term buyers.
In such a scenario, it will be crucial to monitor the convergence of the 21-day moving average (DMA) and 50-DMA, located near 0.6230-40. Till we do not advise to buy NZD/USD.
Sell Scenario: - During Thursday's lackluster Asian session, bearish momentum in NZD/USD subsided around the 0.6100 level after experiencing its most significant decline since early February in the previous session.
The current pause in the Kiwi pair's movement may reflect mixed sentiments in the market regarding the Reserve Bank of New Zealand's (RBNZ) next steps. While Governor Adrian Orr has sounded hawkish, the central bank has maintained its peak interest rate at 0.25% following a rate hike.
The subdued RSI (14) conditions also contribute to the NZD/USD pair's temporary respite after the notable drop witnessed on the previous day.
As a result, the pair remains in a defensive position near a crucial support line originating from November 2022, approximately at 0.6090. The yearly low reached in March around 0.6085 also acts as a short-term barrier against further downside.
For the NZD/USD bears to maintain control, they would need to breach the support zone between 0.6090 and 0.6085.
Subsequently, the pair may gradually decline towards the 50% and 61.8% Fibonacci retracement levels of the upside movement from October 2022 to February 2023, situated around 0.6025 and 0.5900, respectively. Till we do not advise to sell NZD/USD.
Support and Resistance Level: -
SupportResistance
S1 0.6050-R1 0.6219
S2 0.5987-R2 0.6324
S3 0.5882-R3 0.6387

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