The New Zealand dollar (NZD) saw a slight increase against the US dollar on Tuesday, buoyed by positive business confidence statistics from New Zealand and a small dip in the US dollar’s value. As of now, the NZD/USD exchange rate rests at approximately 0.5677, reflecting a 0.5% rise for the day.
The dollar index (DXY), which measures the US dollar against six major currencies, is trading at around 101.23 after reaching an intraday peak of 101.43, marking its second consecutive month of gains.
In June, the ANZ Business Confidence Index increased to 36.6 from a previous 10.0, reaching its highest point since February.
However, despite this intraday progress, NZD/USD is still expected to finish the month with a loss of about 5.20%. This decline can be attributed to the general strength of the U.S. dollar, fueled by growing speculation that the U.S. Federal Reserve might raise interest rates later this year.
On another note, ongoing geopolitical tensions remain a concern, particularly regarding the stalled negotiations between the US and Iran. This situation bolsters demand for the safer dollar but adds pressure on risk-sensitive currencies like the kiwi.
Traders are now keeping an eye on upcoming U.S. labor market reports, including ADP employment changes and non-farm payrolls (NFP). These figures could significantly influence Fed interest rate expectations and potentially dictate the next movements for NZD/USD.
Technical analysis:
According to the daily chart, NZD/USD remains below both the 200-day simple moving average (SMA) at 0.5824 and the 100-day SMA at 0.5862, indicating a bearish sentiment in the short term.
The pair is nearing a resistance level around 0.5700, and with the Relative Strength Index (RSI) at 35.5 recovering from an oversold position, it’s apparent that downside pressure persists, although the rate of decline seems to be easing.
On the upper side, initial resistance is noted at the 0.5700 mark, followed by levels at 0.5770, and then the longer-term SMA levels at 0.5824 and 0.5862, which create a broader resistance zone.
In terms of support, the next level to watch is at 0.5600. If this level is broken, the current downward trend may extend; however, as long as the pair remains above this threshold, it will likely continue to consolidate below the cluster of daily moving averages.
