General analysis NZDUSD for 02.03.2022

Current Dynamics

After an insignificant increase at the beginning of the week, the Kiwi is trading in a narrow range in expectation of Fed Chair Powell speech.

Yesterday the ISM manufacturing index came better than experts' expectations. The index reading was at 58.6, while experts were expecting the value of 58.0.

Data on inflation in New Zealand did not inspire optimism. Against the background of the growing pandemic SARS-CoV-2 (during the last day more than 22 thousand infected have been confirmed in New Zealand) the inflation rate has grown up to 5.1%. Also, construction sector is decreasing, the number of building permits issued in January has decreased by 9.2%. At the same time the governments of New Zealand and Great Britain on March 1 signed a free trade agreement. Agreement may come into force at the end of 2022, which will lead to the removal of trade duties on more than 99% of goods. Experts expect that exports to Britain will grow by 50%.

However today all investors' attention is fixed on the speech of the Fed Chair Powell at 17:00(GMT+2). Growth in energy prices caused by the instability in Eastern Europe (the conflict between Russia and Ukraine), sanctions against Russia, and high inflation in the U.S. Traders want to hear how Chair Powell assesses the risks from these factors. Whether or not the US Regulator will decide to raise the interest rate by 50 bps.

Support and resistance levels.

NZD/USD has been trading in a narrow range near the key Fibonacci level of 68.1 for the second day. The instrument failed to set a new local high near the Fibonacci level of 76.4. The RSI Oscillator is above 50 and has a downward trend.

• Support levels: 0.6529, 0.6614, 0.6667, 0.6710, 0.6753.
• Resistance levels: 0.6805, 0.6891, 0.7113

Trading scenarios

• Short positions can be opened below the level of 0.6753 with target of 0.6614 and stop-loss 0.6805 Execution time: 1-3 days
• Long positions can be opened above the level of 0.6891 with target of 0.7113 and stop-loss 0.6805 Execution time: 2-4 days