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NZDUSD rallied by +0.43% early Friday as bulls defended the 0.6080 level, the 2023 low. The weakness in the dollar helped maintain gains ahead of the release of US economic data. There will be a release of US Consumer Spending data, along with Durable goods and Retail sales which are expected to soften, causing a dent in US dollar strength.
Moreso, the rebound in commodity prices helped New Zealand bulls gain traction away from the yearly low. In oil prices, USWTI was up +1.08% and Brent Crude oil prices gained +0.92% to the close of the week on rising demand as indicated by better-than-expected US crude oil inventories that came in at -12.456M vs -0.920M on Wednesday. The correlation between, the New Zealand dollar and Gold suggests risk appetite as gold traded higher by +0.64% on Friday.
However, the US dollar remains resilient following the hawkish tone from the Fed meeting minutes released earlier on Wednesday and the GDP data, although less than previous, beat expectations. The US GDP data released on Thursday came in at 1.3% vs 1.1% expected, while Initial Jobless Claims came in at 229K vs 250K expected.
Traders should closely watch the US economic data due for release later in the New York session for volatility. Major volatility is also expected as markets brace to wind down 2nd quarter trades ahead of next week’s US Jobs data.
Weekly Chart Analysis
The NZDUSD opened lower, this week towards the 2023 lows. The bulls have been struggling to break above the 0.6380 level, a 16-week high as prices remain rangebound between the 0.6080 low and 0.6380 high. Bulls could target the 0.6380 level and 0.6550 levels. A break above those levels could reinforce bullish strength towards the 0.7000 level, a 2023 high.
However, a close below the 0.6080 level could trigger selling pressure and the next key support could be the 0.5500 level, a 2020 low. A failure to hold gains above the 2023 low could coincide with the RSI indicator showing bearish weakness as the indicator trades below the 50.00 level.
The ActivTrader Sentiment tool suggests that 85% of retail traders are bullish on the NZDUSD pair. A recovery in commodity prices held NZDUSD after slightly breaking below 2023 low. Bulls could be leveraging on the price trading back above the yearly support.
However, the fundamentals due for release later in the New York session are likely to cause more volatility on the pair. A better-than-expected reading could underpin a hawkish Fed following the Wednesday FOMC meeting minutes and could cause further divergence on the RBNZ and Fed policy direction.
Daily Chart Analysis
The NZDUSD bounced back from the 0.6050 low early Friday, after slightly trading below the 2023 lows at 0.6080 level. The pair seemed to have faked a breakout as prices are seen to have traded back above the 0.6080 area. A hold above that yearly support could strengthen bulls and a near-term target on the upside is at the 0.61800 level, which coincides with a 200-day moving average. A break above that level would be necessary to see bulls extend gains towards the 0.6380 level, a 3-month high.
However, volume indicators and moving averages are pointing to lower prices on the NZDUSD. The bullish recovery is capped by a number of key resistance levels and a failure to hold above the 0.6080 level, bears could expect lower prices towards the 0.59700 level. The MACD indicator is currently trading below the 0.00 benchmark suggesting heavy selling below that yearly low. Moreso, price trading below the 200-day and 50-day moving averages could limit upside gains.
