Daily Analysis For NZD/USD 26-05-2023

Daily Analysis For NZD/USD 26-05-2023

NZD/USD Analysis
Key Points
• The NZD/USD pair has entered a sideways phase, hovering around 0.6060, and has experienced a mild recovery ahead of the release of US Durable Goods Orders.
• Market expectations suggest that Federal Reserve policymakers may take advantage of the tight credit conditions to alleviate pressure on inflation rather than implementing further interest rate hikes. This approach aims to manage inflationary pressures without resorting to additional tightening measures.
• Reserve Bank of New Zealand (RBNZ) Silk has advised maintaining the current interest rates for now and adopting a data-specific approach. This indicates that the RBNZ will closely monitor economic indicators before making any adjustments to monetary policy.
• NZD/USD pair is currently in a sideways pattern, awaiting the outcome of US Durable Goods Orders and monitoring the stance of central banks, particularly the Federal Reserve and the Reserve Bank of New Zealand, for potential future developments.
Today's Scenario: - The NZD/USD pair is trading at its lowest levels since November as the Reserve Bank of New Zealand (RBNZ) announces the easing of lending restrictions. The decision to ease Loan-to-Value Ratio (LVR) restrictions was driven by the belief that the risks to financial stability from high-LVR lending have reduced.
Adding to the downward pressure on the New Zealand dollar, the US dollar has been strengthening broadly. Additionally, New Zealand's Consumer Confidence gauge slightly declined in May, reflecting ongoing cost-of-living increases and higher mortgage rates for households with mortgages.
In contrast, the US economy has shown positive signs. The second estimation of US GDP for Q1 2023 was revised up, and various indicators such as the Chicago Fed National Activity Index and Kansas Fed Manufacturing Activity have improved. However, concerns about the US default continue to weigh on market sentiment.
Overall, the NZD/USD pair is being influenced by the RBNZ's lending restriction easing, the strength of the US dollar, and flat consumer confidence in New Zealand. Traders will continue to monitor developments related to the US default and any further economic data releases for potential market impact.
Diagram of NZD/USD
NZD/USD
Economic Events : -
GMTEventImpactCurrency
00:30(Japan) Tokyo Core CPI YoYLowJPY
00:30(Japan) Tokyo CPI YoYLowJPY
00:30(Japan) Tokyo CPI Ex Food and Energy YoYLowJPY
02:30(Australia) Retail Sales MoMHighAUD
04:35(Japan) 3-Month Bill AuctionLowJPY
06:00(Japan) Leading Economic IndexLowJPY
06:00(Japan) Coincident IndexLowJPY
07:00(Lithuania) Retail Sales MoMLowEUR
07:00(Lithuania) Retail Sales YoYLowEUR
07:00(United Kingdom) Retail Sales ex Fuel MoMHighGBP
07:00(United Kingdom) Retail Sales ex Fuel YoYHighGBP
07:00(United Kingdom) Retail Sales YoYHighGBP
07:00(United Kingdom) Retail Sales MoMHighGBP
07:30(Switzerland) Non Farm PayrollsLowCHF
07:45(France) Consumer ConfidenceMediumEUR
08:15(Euro Area) ECB Enria SpeechLowEUR
08:40(Euro Area) ECB Lane SpeechMediumEUR
09:00(Italy) Consumer ConfidenceMediumEUR
09:00(Italy) Business ConfidenceMediumEUR
09:00(Austria) Bank Austria Manufacturing PMIHighEUR
10:10(Italy) 6-Month BOT AuctionLowEUR
11:00(France) Jobseekers TotalLowEUR
11:00(France) Unemployment Benefit ClaimsMediumEUR
11:00(Luxembourg) Balance of TradeLowEUR
13:30(Canada) Wholesale Sales MoMLowCAD
13:30(United States) Goods Trade BalanceHighUSD
13:30(United States) Wholesale Inventories MoMMediumUSD
13:30(United States) Core PCE Price Index MoMHighUSD
13:30(United States) Core PCE Price Index YoYLowUSD
13:30(United States) PCE Price Index MoMMediumUSD
13:30(United States) PCE Price Index YoYMediumUSD
13:30(United States) Personal Spending MoMHighUSD
13:30(United States) Personal Income MoMHighUSD
13:30(United States) Retail Inventories Ex Autos MoMMediumUSD
13:30(United States) Durable Goods Orders Ex Transp MoMHighUSD
13:30(United States) Non Defense Goods Orders Ex AirLowUSD
13:30(United States) Durable Goods Orders MoMHighUSD
13:30(United States) Durable Goods Orders ex Defense MoMHighUSD
15:00(United States) Michigan Consumer ExpectationsLowUSD
15:00(United States) Michigan Current ConditionsLowUSD
15:00(United States) Michigan 5 Year Inflation ExpectationsLowUSD
15:00(United States) Michigan Consumer SentimentHighUSD
15:00(United States) Michigan Inflation ExpectationsLowUSD
16:00(Canada) Budget BalanceLowCAD
18:00(United States) Baker Hughes Oil Rig CountLowUSD
18:00(United States) Baker Hughes Total Rig CountLowUSD
Buy Scenario: - To target higher levels, the NZD/USD pair needs to surpass the pivot point at 0.6074. If successful, it could aim for the First Major Resistance Level (R1) at 0.6104 and potentially reach the Thursday high of 0.6114. A move back to $0.61 would indicate a bullish session. However, for a breakout to occur, supportive news regarding the US debt ceiling would be necessary.
In the event of a breakout, the Kiwi may test the Second Major Resistance Level (R2) at 0.6146. Further upside potential could lead to the Third Major Resistance Level (R3) at 0.6176. Till we do not advise to buy NZD/USD.
Sell Scenario: - Failure to move above the pivot point would maintain the focus on the downside, with the First Major Support Level (S1) at 0.6032 coming into play. However, unless there is a significant sell-off due to developments in Washington, the NZD/USD pair is expected to remain above the sub-$0.60 level. The Second Major Support Level (S2) at 0.6002 is likely to provide support and limit the downside.
The Third Major Support Level (S3) is located at 0.5960. Till we do not advise to sell NZD/USD.
Support and Resistance Level: -
SupportResistance
S1 0.6032-R1 0.6104
S2 0.6002-R2 0.6146
S3 0.5960-R3 0.6176

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