NZD/USD Faces Challenges Amid US Dollar Surge – Latest Analysis
NZD/USD continues a five-day losing streak, and trades near 0.5820.
Fundamental Overview
- The NZD/USD encounters difficulties as the US Dollar gains strength.
- Federal Reserve Chair Powell clarified that there are no immediate plans for a rate hike.
- The Greenback receives support from positive US Treasury yields.
The NZD/USD pair has continued its downward trend, which began on October 17 and is currently trading around 0.5820 during the European session on Monday. The pair faces challenges due to the resurgence of the US Dollar, driven by higher US Treasury yields. Additionally, increased risk aversion, resulting from the Israel-Hamas military situation, is putting pressure on the NZD/USD pair.
Divergent comments from US Federal Reserve (Fed) officials about the future of interest rates may constrain the potential declines of the NZD/USD pair. Atlanta Fed President Raphael Bostic implied that the Federal Reserve is improbable to decrease interest rates until at least the middle of the next year, while Fed Philadelphia President Patrick Harker favored keeping interest rates steady.
Moreover, Federal Reserve (Fed) Chairman Jerome Powell underscored last week that the central bank does not have immediate plans for a rate hike, emphasizing their readiness to consider tightening monetary policy in response to indications of economic expansion.
Investors are expected to keep a close watch on the US S&P Global PMI scheduled for Tuesday and the Q3 Gross Domestic Product (GDP) report set for release on Thursday. On the New Zealand economic calendar, attention will be focused on Consumer Confidence data to be published on Friday.
NZD/USD Technical Analysis Daily Chart:
Technical Overview
NZD/USD is currently trading within a down channel.
NZD/USD is positioned below all Moving Averages (SMA).
The Relative Strength Index (RSI) is in the selling zone, while the Stochastic oscillator suggests a negative trend.
Immediate Resistance level: 0.5847
Immediate support level: 0.5805
How To Trade NZD/USD
NZD/USD initially surged but later retreated from its peak, establishing a pattern of lower lows. Although there was an attempt to move higher, it proved unsustainable, resulting in a decline. The current price is positioned at a crucial support level, and a breach of this zone could open the door to further downside potential.
TRADE SUGGESTION- STOP SELL– 0.5796, TAKE PROFIT AT- 0.5716, SL AT- 0.5855.