Market Overview: NZD/USD Developments
The NZD/USD pair is experiencing some light pressure, currently trading around 0.5935 during late Asian trading on Thursday. The market seems a bit cautious as investors are keenly awaiting the results of President Trump’s discussion with Chinese leader Xi Jinping.
As of now, Asian stock markets are mostly down, with the Nikkei Stock Average dropping by 0.3%, hovering near 63,070 yen. The US Dollar Index (DXY), which gauges the dollar’s strength against six major currencies, is holding steady around 98.50, which is pretty close to its weekly high of 98.60 achieved on Wednesday.
Considering that New Zealand has substantial trade ties with China, the developments from the Trump-Xi meeting are likely to play a crucial role in influencing the New Zealand dollar (NZD).
In the US, there are growing inflation worries driven by rising energy prices. This situation is prompting speculation that the Federal Reserve may increase interest rates this year.
According to the CME FedWatch tool, the likelihood of the Fed raising rates at least once this year stands at 32.2%, a significant rise from nearly zero just a month ago.
Technical Analysis of NZD/USD
Currently, NZD/USD is trading slightly lower at around 0.5935. Yet, it retains a mildly bullish outlook, as it’s positioned within an overhead retracement cluster that’s above the 20-day exponential moving average (EMA) at 0.5909 and above the 50.0% Fibonacci retracement at 0.5890.
The Relative Strength Index (14) is nearing 55, indicating healthy momentum, though not excessive. This suggests that the decline could see support as long as prices stay above the nearby moving average.
Looking at the resistance levels, immediate resistance can be found at the 61.8% Fibonacci retracement, approximately around 0.5939, followed by the 78.6% level at 0.6008, and the recent swing high marked by the 100.0% retracement at 0.6095. On the downside, the first support lies near the 20-day EMA at 0.5909, before the 50.0% retracement at 0.5890. A deeper pullback could see prices reach a 38.2% level at 0.5842 and a 23.6% retracement at 0.5782, with a more distant structural floor at 0.5686.
