NZD/USD, EUR/NZD, GBP/NZD – Forecast:
- New Zealand dollar / US dollar Close to critical support as hawkish Fed rate expectations diminished.
- fatigue in it EUR/NZD And British pound / New Zealand dollar parades.
- What are the key levels to watch in the corkscrew? New Zealand dollar crosses?
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The New Zealand dollar undoubtedly looks weak against its peers as the market digests the possibility of the New Zealand dollar price peaking. However, the coin is facing some very strong support against some of its peers which calls for caution in turning overly bearish.
The New Zealand dollar continues to suffer from the shifting stance of the Reserve Bank of New Zealand (RBNZ) which sees interest rates peaking at current levels after last month raising its benchmark interest rate by 25 basis points to 5.5%. See “NZD Slides as RBNZ Climbs 25 bps, But Sees Prices Peak,” posted on May 24. Moreover, the recent hawkish repricing of Fed rate expectations and weaker-than-expected China data have weighed on the risk-sensitive currency.
NZD/USD weekly chart
Chart created using TradingView
However, comments from Federal Reserve officials on Wednesday signaled a pause in the upcoming FOMC meeting, providing some relief to dollar bears. Money markets are pricing in a 60% chance of a pause at the June 13-14 meeting, up from a roughly 40% chance on Tuesday. Moreover, global Caixin/S&P manufacturing PMI data showed that factory activity in China unexpectedly returned to growth in May, in contrast to official factory activity data which showed a faster-than-expected decline in May.
NZD/USD daily chart
Chart created using TradingView
NZD/USD: Watch channel support
NZD/USD is testing vital converging support on the lower edge of a downtrend channel from February and a 50% retracement of the October 2022 to February 2023 rally. Overall, 38%-50% retracements are reasonable, and not necessarily the end of the previous trend (uptrend in this case) . Moreover, late last year the pair was able to retrace 100% of the August 2022 to October 2022 slide – often a sign of bear exhaustion. However, a break above May high of 0.6385 is needed for downside risks to fade.
EUR/NZD Weekly Chart
Chart created using TradingView
EUR/NZD: The bullish pressure appears to be waning
EUR/NZD’s drop below an important cushion at the October high of 1.7550 confirms that the upward pressure has diminished for the time being. This follows the pullback from the top of the ascending channel in 2015. The sharp rebound in the past two weeks has been associated with weak momentum, which raises the odds of a dead cat rebound, rather than a fresh high. EUR/NZD is facing an initial ceiling at the early May high of 1.7835, and unless this resistance is broken, chances of a 1.7150 to 1.7850 range developing in the meantime are high.
GBP/NZD monthly chart
Chart created using TradingView
GBP/NZD: Hit a barrier
The GBP/NZD has seen an impressive rally in recent weeks. However, the cross is looking overbought as it tests a major hurdle on the 200-month moving average and the downtrend line from 2006. The 14-month RSI is now around 60 – levels that have been associated with a pullback in the cross in the past (see chart ). However, GBP/NZD needs to drop below the immediate support at 2.04 April high for the upward pressure to ease.
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– Posted by Manish Grady, Strategist for DailyFX.com
Connect with Jaradi and follow her on Twitter: @JaradiManish