NZD/USD: Trading Recommendations

Following the results of trade negotiations between the USA and China last week, the White House decided to postpone the increase in duties on Chinese goods planned for this week.

China, for its part, promised to increase the volume of agricultural imports from the United States, bringing it to the amount of $40-50 billion.

Nevertheless, this news did not cause much enthusiasm for investors. Arrangements to increase China's imports of US agricultural products to $50 billion are vague, and disagreements on issues such as protecting intellectual property and subsidizing agricultural producers in China have not been resolved.

The measures taken are not enough to mitigate the uncertainties that are holding back the growth of the global economy.

Investors again prefer the US dollar. The DXY dollar index is rising today for the second day in a row.

New Zealand’s export-oriented economy suffers greatly from a slowdown in the global economy and a decline in purchases of New Zealand products.

“World economic activity continues to weaken, which reduces the demand for goods and services from New Zealand. Increased uncertainty and a reduction in international trade contribute to a decrease in economic growth in the trading partner countries”,

the RBNZ said in a statement following a bank meeting in August.

At the beginning of the European session on Tuesday, the NZD/USD pair is trading near 0.6282, 46 pips below the opening price earlier this week.

Of the news today regarding NZD, you should pay attention to the publication (in the period after 14:00 – 14:30 GMT) of data with the results of the GlobalDairyTrade (GDT) milk auction.

The share of dairy exports in total exports of New Zealand is approaching 20%.

If the data indicate an increase in world prices for dairy products (they are expected to grow by 1.8%), primarily for milk powder, then the New Zealand dollar will strengthen.

Also, today (at 21:45 GMT) the Bureau of Statistics of New Zealand will publish the consumer price index for the 3rd quarter. The CPI is a key indicator for measuring inflation. A positive result will strengthen NZD, a negative result will weaken. Forecast: + 0.6% (against + 0.6% in the 2nd quarter) and + 1.4% (against + 1.7% in the 2nd quarter) in annual terms. Data worse than forecast and previous values ​​are likely to adversely affect NZD. Data better than forecast will strengthen NZD.

Meanwhile, the New Zealand dollar resumed its decline at the beginning of today’s European session. The negative fundamental background creates the prerequisites for further weakening of the New Zealand dollar.

Below the resistance level of 0.6560 (EMA200 on the daily chart), the bearish trend NZD/USD prevails.

Currently, NZD/USD is trading near 0.6282, below the short-term resistance level of 0.6305 (ЕМА200 on the 1-hour chart).

Below resistance levels 0.6305, 0.6336 (ЕМА200 on the 4-hour chart), only short positions should be considered. The tendency of the RBNZ to maintain a soft policy and possibly further lower the rate puts pressure on NZD/USD towards its further decrease.

Support Levels: 0.6260, 0.6200, 0.6100

Resistance Levels: 0.6305, 0.6336, 0.6365, 0.6425, 0.6490, 0.6560

Trading Scenarios

Sell ​​by market. Stop-Loss 0.6315. Take-Profit 0.6260, 0.6200, 0.6100

Buy Stop 0.6315. Stop-Loss 0.6270. Take-Profit 0.6336, 0.6365


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