On Tuesday, the New Zealand dollar (NZD) dipped against the US dollar (USD), sitting just above $0.5850. This marks a decline from Monday’s peak of $0.5880. As tensions between the US and Iran fluctuate, the market is taking a cautious stance, especially with rising oil prices creating a defensive environment for risk-sensitive assets like the Kiwi.
US President Donald Trump announced on Monday that he had called off attacks on Iran, emphasizing that a new peace plan could lead to a favorable nuclear deal. This news seems to have been met with a tempered sense of optimism in the markets, although concerns remain about the potential long-term inflationary effects stemming from the surge in energy prices.
Brent crude oil is currently priced over $107.00, while the US benchmark, WTI, is near $103.00. Such price levels are significantly impacting businesses and consumers in New Zealand, placing pressure on economic growth.
Technical analysis: Bullish correction within a bearish trend
Despite a recent rebound from Monday’s lows of around 0.5820, the NZD/USD maintains a short-term bearish outlook. The 4-hour Relative Strength Index (RSI) is at 36, suggesting waning momentum after moving out of an oversold zone. The Moving Average Convergence Divergence (MACD) shows slight positivity but remains shallow, indicating that a correction may be on the horizon if a pullback occurs.
The bulls are facing resistance around the 0.5880 zone, with prices still trailing below the downtrend line established since early May, which is now around 0.5915. Further upwards, approximately 0.5935 appears to be the next target, where previous support has turned into resistance.
On the downside, the 0.5850 level provided support on Tuesday, keeping the path clear to the April 29th and May 18th lows near 0.5820, as well as the April 12th lows around 0.5795.
