NZD/USD declines towards 0.6100 amid subdued Business NZ PSI data and increased risk aversion
FUNDAMENTAL OVERVIEW:
- NZD/USD slips as Business NZ PSI falls to 40.2 in June, marking its fourth consecutive monthly decline.
- The US Dollar strengthens amid increased risk aversion following the attempted assassination of former US President Trump on Saturday.
During Monday’s Asian session, NZD/USD declined to near 0.6100, influenced by the Business NZ Performance of Services Index (PSI) dropping to 40.2 in June. This marks its fourth consecutive monthly decrease, with activity levels at their lowest since the pandemic began, despite no lockdowns. Previously, the index stood at 42.6.
In her recent analysis, Kelly Eckhold, Chief Economist at Westpac, highlighted the Reserve Bank of New Zealand’s (RBNZ) significant downward revisions in growth projections. There is growing confidence within the RBNZ that annual inflation could soon drop below 3%. Eckhold anticipates the RBNZ to initiate policy easing by February next year, with the possibility of earlier adjustments contingent on incoming economic data.
The US Dollar’s resurgence is exerting downward pressure on the NZD/USD pair. Risk aversion has escalated in the wake of the attempted assassination of former US President Donald Trump on Saturday. Analysts speculate that a potential boost to Trump’s electoral chances could spur ‘Trump-victory trades,’ potentially strengthening the US Dollar and steepening the US Treasury yield curve, according to Reuters.
NZD/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
NZD/USD is currently trading within the down channel.
NZD/USD is positioned below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in a Neutral zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 0.6113
Immediate support level: 0.6078
HOW TO TRADE NZD/USD
After initially trading higher, NZD/USD encountered resistance and reversed to the downside. It briefly rebounded but failed to sustain the upward momentum, breaking below a key support zone. Currently, the pair is testing a resistance level, with the potential for further downside if rejection occurs.