The New Zealand Dollar has gained momentum in Tuesday’s Asian session as positive risk sentiment weighs on the US Dollar, resulting in a rise in the NZD/USD pair. Investors are now eagerly awaiting the People’s Bank of China (PBOC) rate decision and Fedspeak on Tuesday for further market cues.
The People’s Bank of China (PBOC) decided to leave the one-year and five-year Loan Prime Rates (LPR) unchanged on Tuesday at 3.35% and 3.85%, respectively. This decision has influenced the movement of the New Zealand Dollar in the currency markets. Additionally, 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.
Federal Reserve Bank of Minneapolis President Neel Kashkari’s comments on potentially cutting US interest rates in September due to concerns about the weakening labor market have further added pressure on the US Dollar. The markets are now pricing in a nearly 77% chance of a 25 basis points (bps) Fed rate cut in its September meeting, based on the CME FedWatch Tool.
The NZD/USD pair has resumed its upside journey on the daily chart after breaking above the descending trendline on Monday. The pair is also holding above the key 100-day Exponential Moving Average (EMA) with the bullish 14-day Relative Strength Index (RSI) supporting buyers. A decisive break above the 0.6100 psychological level could pave the way to 0.6154, the high of July 8.
On the downside, 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, the low of August 15. Further support levels are located at 0.5846, the lower limit of the Bollinger Band.
The table below illustrates the percentage change of the US Dollar against major currencies this week, showing a general weakness in the USD. The heatmap displays the percentage changes of major currencies against each other, providing valuable insights for traders in the forex market.
The New Zealand Dollar has shown strength in the face of positive risk sentiment and expectations of a Fed rate cut. Technical analysis of the NZD/USD pair suggests further upside potential, with key support and resistance levels to watch. Traders should keep a close eye on upcoming economic data releases and central bank decisions for further market movements.