NZD/USD: Trading Scenarios
Yuri Papshev | Nov 11, 2019 06:54AM ET
On Wednesday, the next RBNZ meeting will take place, and the decision on rates will be published at 01:00 (GMT).
In August, the RBNZ cut the rate at once by 50 bp to 1.00%, explaining this decision by the aggravation of the trade war between the US and China and the loss of momentum in the New Zealand economy. RBNZ executives are inclined to further soften monetary policy, believing that wage growth in the country remains weak, inflation expectations are falling, and low levels of business confidence indicate a slowdown in hiring and wage growth.
It is widely expected that the rate will be reduced at this meeting by 0.25%, to the level of 0.75%.
The RBNZ press conference will begin on Wednesday at 02:00 (GMT).
Probably, the head of the RBNZ Adrian Orr will reaffirm the bank’s penchant for soft monetary policy, which will preserve the pressure on the New Zealand currency.
New Zealand's export-oriented economy suffers greatly from a slowdown in the global economy and a decline in purchases of New Zealand products, including by China. Meanwhile, optimism and risk appetite of investors are gradually dying out. Although China announced an agreement to abolish duties, U.S. President Donald Trump said last Friday that the United States did not promise to abolish existing customs duties on Chinese goods.
Meanwhile, the New Zealand dollar strengthened, and NZD/USD rose in the first half of today's trading day, rising to a short-term resistance level of 0.6372 (ЕМА200 on the 1-hour chart, ЕМА50 on the daily chart).
Nevertheless, expectations of a lower interest rate of the RBNZ and the bank's propensity for soft policy will restrain NZD/USD and the New Zealand dollar from further growth.
Below the resistance level of 0.6525 (EMA200 on the daily chart), short positions remain preferred. The breakdown of the local support level of 0.6322 will be a signal for resuming NZD/USD sales with the immediate target at 0.6260 (Fibonacci level 0% and minimums of the global wave of pair decline from the level of 0.8820).
Support Levels: 0.6322, 0.6260, 0.6200, 0.6100
Resistance Levels: 0.6372, 0.6390, 0.6435, 0.6475, 0.6525
Trading Scenarios
Sell by market. Stop-Loss 0.6410. Take-Profit 0.6322, 0.6300, 0.6260, 0.6200, 0.6100
Buy Stop 0.6410. Stop-Loss 0.6360. Take-Profit 0.6435, 0.6475, 0.6525
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