. NZD/USD Reaches 0.6140 Amid PSI Uptrend

NZD/USD Reaches 0.6140 Amid PSI Uptrend

NZD/USD Reaches 0.6140 Amid PSI Uptrend

19 Feb 2024

NZD/USD makes a strong move towards near 0.6140 following positive Business NZ PSI data, while the US Dollar maintains its stability.

FUNDAMENTAL OVERVIEW:

  • Persisting in a positive trajectory, NZD/USD sees upward movement as the US Dollar remains steady.
  • The New Zealand Dollar strengthens, propelled by robust Business NZ PSI data.
  • RBNZ Governor Adrian Orr notes the need for further efforts to anchor inflation expectations to the 2.0% target.

Continuing its winning streak since Wednesday, NZD/USD edges up to approximately 0.6140 in European trading on Monday. The New Zealand Dollar (NZD) gains momentum following the positive Business NZ Performance of Services Index (PSI) released today.

Derived from surveys of senior executives in private-sector firms, the Business NZ PSI data indicates an expansion in the service sector, with an improved reading of 52.1 in January, compared to the previous 48.8. Similarly, the Business NZ PMI released on Friday showed improvement, with a reading of 47.3, surpassing the previous 43.4.

On Friday, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr delivered a speech titled “The Monetary Policy Remit and 2.0% Inflation” at the New Zealand Economics Forum in Hamilton. Orr highlighted that the RBNZ has additional responsibilities to fulfil in order to secure inflation expectations to the 2.0% target. Notably, he refrained from discussing rate targets.

Orr underscored the importance of aligning core inflation with the 1-2% target range, stating that it is vital for reaching the overall inflation target. He reiterated that the 2.0% inflation midpoint target continues to be deemed appropriate.

Nevertheless, prevailing market sentiment suggests no anticipated changes to interest rates in the upcoming Federal Reserve meetings in March and May. The CME Fed Watch Tool indicates a roughly 52% likelihood of a 25 basis points (bps) rate cut in June. On Friday, the US Dollar (USD) was unable to maintain its initial gains, driven by stronger-than-expected Producer Price Index (PPI) data from the United States, resulting in an uptick in the NZD/USD pair.

NZD/USD TECHNICAL ANALYSIS DAILY CHART:

NZD/USD

Technical Overview:

NZD/USD is currently trading within an up channel.

NZD/USD is positioned above all Moving Averages (SMA).

The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Positive trend.

Immediate Resistance level: 0.6146

Immediate support level: 0.6088

HOW TO TRADE NZD/USD

After experiencing a notable ascent, NZD/USD underwent a correction and has since been trading within a range. Currently, it is approaching a crucial resistance zone, and a potential further upside may unfold if this zone is breached.

TRADE SUGGESTION- STOP BUY– 0.6156, TAKE PROFIT AT- 0.6227, SL AT- 0.6120.