NZD/USD extends its decline, approaching the 0.6110 level, anticipating New Zealand’s CPI data release scheduled for Wednesday.
FUNDAMENTAL OVERVIEW:
- NZD/USD persists in its decline as the US Dollar recovers from intraday losses.
- The strengthened risk appetite exerts downward pressure on the Greenback.
- Challenges for the New Zealand Dollar arise from the contraction in the domestic manufacturing sector.
NZD/USD extends its two-session losing streak on Monday by trimming its intraday gains. The pair hovers around 0.6110 in the Asian session, with the US Dollar (USD) experiencing a slight downward pressure attributed to an enhanced risk appetite.
Entering the blackout period before the January meeting, the Greenback encounters downward pressure despite hawkish remarks from Federal Reserve (Fed) members. Market sentiment seems influenced by expectations that the Fed might implement more interest rate cuts in 2024 than other major central banks, potentially leading to selling pressure on the US Dollar.
San Francisco Fed President Mary Daly’s recognition of the significant effort required to return inflation to the 2.0% target indicates a cautious stance. Additionally, Atlanta Fed President Raphael Bostic has expressed a willingness to adapt his perspective on the timing of rate cuts, underscoring the US Fed’s dedication to a data-dependent approach.
In New Zealand, the Business NZ Performance of Manufacturing Index (PMI) indicated contraction on Friday, falling from 46.5 to 43.1. This signals possible difficulties in the country’s manufacturing sector. Moving forward, investors will keenly monitor the upcoming release of New Zealand’s Consumer Price Index (CPI) data scheduled for Wednesday, with expectations pointing towards a decline in the fourth quarter.
NZD/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
NZD/USD is currently trading within a down channel.
NZD/USD is positioned below the 20&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Selling zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 0.6137
Immediate support level: 0.6098
HOW TO TRADE NZD/USD
After a substantial upward movement, NZD/USD encountered resistance and declined. It is trading within a descending channel and approaching a crucial support zone. If this support level is breached, there could be further downside potential.
TRADE SUGGESTION- STOP SELL– 0.6078, TAKE PROFIT AT- 0.5996, SL AT- 0.6137.