In Tuesday’s Asian session, the New Zealand Dollar gained momentum as positive risk sentiment weighed on the US Dollar, leading to an increase in the NZD/USD pair. Investors eagerly awaited the rate decision from the People’s Bank of China (PBoC) ahead of Fedspeak later in the day.
The PBoC announced that the one-year and five-year Loan Prime Rates (LPR) would remain unchanged at 3.35% and 3.85%, respectively. This decision had an impact on the currency market, especially on the New Zealand Dollar.
New Zealand’s Trade Balance data for July showed a deficit of NZD $-9.29B YoY, slightly better than the previous reading of $-9.5B. The report indicated a decrease in exports to $6.15B and an increase in imports to $7.11B compared to previous readings.
Federal Reserve Bank officials Neel Kashkari and Austan Goolsbee expressed their views on potential interest rate cuts and the state of the US economy. Market participants are currently pricing in a 77% chance of a 25 bps rate cut at the Fed’s September meeting, as indicated by the CME FedWatch Tool.
On the daily chart, the NZD/USD pair continued its upward movement after breaking above a descending trendline. It is currently trading above the key 100-day Exponential Moving Average (EMA) with a bullish 14-day Relative Strength Index (RSI) supporting the buyers. A decisive break above the psychological level of 0.6100 could lead to further gains towards 0.6154 and 0.6222.
The crucial support level for NZD/USD is at 0.6050, representing the 100-day EMA and the descending trendline. A sustained trading below this level could expose 0.5974 and 0.5846 as the next contention level. Traders should keep an eye on these levels for potential price movements.
The table below shows the percentage change of the US Dollar (USD) against major currencies this week. The US Dollar was relatively weak against various currencies, as indicated in the heat map. Traders can use this information to gauge the overall performance of the USD in the currency market.
By analyzing the recent events and data related to the New Zealand Dollar, traders and investors can make informed decisions when trading the NZD/USD pair. It is essential to stay updated on central bank decisions, economic indicators, and technical analysis to navigate the currency markets successfully.
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