Technical Analytics Report

NZD/USD: Fundamental Analysis Report 14 May 2021

NZD/USD: Fundamental Analysis Report 14 May 2021


Current Trend: Depreciation May Continue

After updating its April high, the NZD/USD pair declined on the back of strong US inflation data. The Consumer Price Index excluding Food and Energy turned out to be significantly higher than expected, amounting to 3% instead of the projected 2.3% in annual terms. High inflation can push the US Fed to pursue a tighter monetary policy, which will have a positive impact on USD. In the near future, investors do not expect a rate hike, but they will follow the rhetoric of the American regulator, whose officials have repeatedly stated that if annual inflation consolidates above 2%, the US Fed will be forced to intervene. 

In turn, the Reserve Bank of New Zealand predicts that inflation in the country will be kept at just over 2% over the next two years. Raising the interest rate is out of the question for now, so the regulator proposes to monitor economic indicators. 

Today, the NZD/USD pair is supported by the data on Business NZ PMI. In April, the indicator was 58.4 points, which is a good result even compared to the record level of 63.6 points in March. 

Support and Resistance

After updating the April high, the pair dropped to the support level of 0.7139, a breakdown of which will lead to a continuation of the fall with the target at 0.6952. If the resistance level of 0.7276 is broken out during the next week, the long-term uptrend will continue with the target of 0.7433. 

The medium-term trend is upward. Buyers this week were unable to break through target zone 2 (0.7279–0.7263). Now the price is trading in correction with the target at the key support of the trend at 0.7129–0.7091.

·         Resistance levels: 0.7276, 0.7433, 0.7520.

·         Support levels: 0.7106, 0.6952, 0.6770. 

Trading Tips

Long positions may be opened above 0.7276 with target at 0.7433 and stop-loss at 0.7195. Implementation time: 7-9 days.

Short positions may be opened below 0.7106 with target at 0.6952 and stop-loss at 0.7183. 

Scenario

Timeframe: Weekly

Recommendation: Buy Stop

Entry Point: 0.7280

Take Profit: 0.7433

Stop Loss: 0.7195

Key Levels: 0.6770, 0.6952, 0.7106, 0.7276, 0.7433, 0.7520 

Alternative Scenario

Timeframe: Weekly

Recommendation: Sell Stop

Entry Point: 0.7100

Take Profit: 0.6952

Stop Loss: 0.7183

Key Levels: 0.6770, 0.6952, 0.7106, 0.7276, 0.7433, 0.7520


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