Current trend

Since the end of last month, the NZD/USD pair has been declining as part of a correction to the medium-term uptrend, reaching six-week lows and testing 0.6164 (Murrey level [5/8]).

The American dollar is strengthening amid a change in investor sentiment: previously, most experts were confident that this year the US Federal Reserve would begin to lower interest rates and reduce them at least three times but the latest macroeconomic statistics and comments from regulator officials raise doubts about this scenario. Thus, in December, employment increased by 216.0K, significantly exceeding expectations, unemployment remained at 3.7% instead of the projected growth of 3.8%, and the inflation rate accelerated from 3.1% to 3.4%, and comments representatives of financial authorities that the transition to a “dovish” policy is inappropriate, support the US currency.

Pressure on the New Zealand dollar is exerted by data on the business confidence index for the current year from the New Zealand Institute of Economic Research (NZIER): Q4 indicator increased from –52.0% to –2.0%, remaining in the red zone. The organization’s experts note that 10.0% of national companies still expect a deterioration in general economic conditions in the coming months.

Support and resistance

The trading instrument is testing 0.6164 (Murrey level [5/8]), consolidation below which will increase the likelihood of a change in the current upward trend and a decline to the area of 0.6103 (Murrey level [4/8]), 0.6042 (Murrey level [3/8]), 0.5981 (Murrey level [2/8]). The key “bullish” level is the middle line of Bollinger bands 0.6260. After a breakdown, the quotes may return to 0.6347 (Murrey level [8/8]).

Technical indicators do not give a single signal: Bollinger Bands are horizontal, MACD histogram is decreasing in the positive zone, and Stochastic is pointing downwards.

Resistance levels: 0.6260, 0.6347.

Support levels: 0.6164, 0.6103, 0.6042, 0.5981.

Trading tips

Short positions may be opened below 0.6164 with the targets at 0.6103, 0.6042, 0.5981, and stop loss around 0.6200. Implementation time: 5–7 days.

Long positions may be opened above 0.6260 with the target at 0.6347 and stop loss around 0.6215.