General analysis NZDUSD for 19.10.2021
Current Dynamics
Last week commodity currencies strengthened due to the growth of investors' interest in risk. The news about QE reduction in the next month does not support the American currency, and the analysts are confident that the Reserve Bank of New Zealand will raise rates faster than the Fed. Yesterday the USD was under pressure after the release of a surprisingly weak U.S. industrial production report. Industrial production fell 1.3% in September and capacity utilization fell to 75.2% for the month from 76.5%. The main reason for the drop in production is a global shortage of semiconductors.
The New Zealand dollar received additional support after the publication of data on the consumer price index. Thus, in the third quarter of this year, the index increased by 2.2%, which is the most significant quarterly growth for 10 years. The rise in inflation is pushing up New Zealand's short-term bond yields, so the NZDUSD has yet to realize its upside potential.
Today at 14:30 (GMT+2), statistics on the U.S. real estate market is expected to be released. Moreover, at 19:15, 20:50, and 21:00 (GMT+2), Fed officials are scheduled to speak.
Support and resistance levels
On the 4-hour chart, the instrument has consolidated above the upper border of Bollinger Bands. The indicator is directed upwards and the price range has expanded strongly, indicating the continuation of the current trend. MACD histogram has reached the highs in the positive zone and maintains a strong buy signal. Stochastic entered the overbought area, a sell signal is expected within 1-3 days.
- Support levels: 0.6945, 0.6995, 0.7035, 0.7070, 0.7100.
- Resistance levels: 0.7140, 0.7170, 0.7205.
Trading scenarios
- Long positions should be opened at the current price with a target of 0.7200 and a stop-loss at 0.7115. Implementation period: 1-2 days.
- Short positions can be opened below the level of 0.7110 with a target of 0.7040 and a stop-loss at 0.7135. Implementation period: 1-2 days.