NZD/USD extends gains to approximately 0.6110 despite prevailing risk aversion sentiment.

FUNDAMENTAL OVERVIEW:

• NZD/USD advances as China works to stabilize its money market.
• Kiwi Trade Balance NZD (YoY) shows improvement at $-13.57B compared to the previous $-13.90B.
• The Federal Reserve is widely expected to maintain its current policy stance on February 31.

After experiencing two consecutive days of losses, NZD/USD rebounded to around 0.6110 in the early European session on Monday. Despite prevailing risk aversion sentiment triggered by a drone attack on a US post in Jordan on Sunday, the NZD/USD pair rises, supported by a stable US Dollar (USD).

The New Zealand Dollar (NZD) could be receiving backing from the People’s Bank of China (PBoC) contemplating a potential reduction in the Medium-term Lending Facility (MLF) rate. With the significant trade ties between China and New Zealand, any shifts in China’s monetary policy may influence the Kiwi Dollar. Moreover, Chinese authorities’ endeavors to stabilize the stock market might offer additional support to New Zealand.

Statistics New Zealand released data on Monday indicating that the country’s Trade Balance NZD (YoY) for December stood at $-13.57B, slightly improving from the previous figure of $-13.90B. Export figures decreased to $5.94B in December, down from $5.99B, while imports declined to $6.26B from the November figure of $ 7.20 B.

Investors are assessing the potential for the Federal Reserve (Fed) to implement policy easing as there are indications of a slowdown in US inflation. According to the CME Fed Watch Tool, futures traders have assigned a 53% probability to the likelihood of the Fed reducing interest rates for the first time in this cycle during the March meeting.

NZD/USD TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

NZD/USD is trading within a down channel.

Ethereum is positioned below the 5&20 Moving Average (SMA).

The Relative Strength Index (RSI) is in the buying zone, while the Stochastic oscillator suggests a Positive trend.

Immediate Resistance level: 0.6130

Immediate support level: 0.6061

HOW TO TRADE NZD/USD

After a significant upward movement, NZD/USD encountered resistance, leading to a decline. Currently, the pair has tested a crucial support zone and is attempting an upward move. It is approaching a resistance zone, and a break above this level could signal upward momentum.

TRADE SUGGESTION- STOP BUY– 0.6140, TAKE PROFIT AT- 0.6215, SL AT- 0.6097.