General analysis NZDUSD for 04.10.2021
Current Dynamics
In the second half of the current week, the NZDUSD pair strengthened after the U.S. dollar lost its support from market participants. At the same time, the U.S. managed to avoid the government shutdown, and Congress extended the temporary financing until December 3. The U.S. economy seems to be in really good shape. Personal spending is up, as is the index of business activity in the manufacturing sector. The problem of high price pressure remains, but investors are focusing on positive news.
New Zealand dollar became the leader of Friday strengthening. In addition to an increased appetite for risk, NZD gets support ahead of the Reserve Bank of New Zealand meeting on monetary policy. Despite the growth of COVID-19, the regulator may raise the key rate this week. In August RBNZ deputy governor Christian Hauksbee, commenting on monetary policy, said that despite the pandemic the regulator is considering a 50 basis point rate hike.
The Reserve Bank of New Zealand will announce its interest rate decision on Wednesday at 03:00 (GMT+2). The pair will also be strongly influenced by US labor market data which will be released on Wednesday and Thursday.
Support and resistance levels
On the 4h chart, the instrument is consolidating near the upper border of Bollinger bands. The indicator is reversing upwards and the price range has widened strongly, indicating the continuation of the current trend. MACD histogram is correcting in the neutral area, forming a weak buy signal. Stochastic has entered the overbought area, a sell signal is expected within 1-3 days.
- Support levels: 0.6840, 0.6870, 0.6905, 0.6940.
- Resistance levels: 0.6970, 0.7005, 0.7020, 0.7050.
Trading scenarios
- Long positions should be opened at the current price with a target of 0.7080 and a stop-loss at 0.6925. Implementation period: 2-3 days.
- It is possible to open short positions below the level of 0.6925 with a target of 0.6855 and a stop-loss at the level of 0.6950. Implementation period: 1-3 days.