NZD Struggles to Maintain Downward Momentum, Sideways Trading Likely.
NZD/USD has maintained its upward trajectory, reaching the highest levels in a month and trading near 0.6310 as the European session approaches. The currency pair has been supported by broad-based weakness in the US Dollar ahead of the eagerly anticipated US Nonfarm Payrolls (NFP) data release. Additionally, the divergence in monetary policy between the Federal Reserve (Fed) and the Reserve Bank of New Zealand (RBNZ) has added to the bullish sentiment.
In our previous analysis from Monday (May 15th) when the NZD was at 0.6295, we anticipated a potential decline for the currency, albeit at a slower pace. We highlighted the key level to monitor at 0.6155.
However, in the past few weeks, the NZD has struggled to make any significant downward progress. As a result, the downward momentum has started to weaken, reducing the probability of the NZD reaching the 0.6155 level.
It is important to note that unless the NZD breaks the level of 0.6280, which continues to act as a strong resistance, the currency is more likely to trade sideways rather than experience further decline.
NZD/USD has experienced a four-day uptrend, reaching its highest levels since early April. The currency pair has been buoyed by a weakening US Dollar and diverging central bank policies between the Fed and RBNZ. Mixed US economic data and increasing rate cut expectations have also contributed to NZD/USD’s upward momentum.