News of the Week (August 12— August 16): NZDUSD Market Review

Focus on NZDUSD! Exciting trading possibilities are just around the corner.

The NZDUSD pair is usually called the “Kiwi,”. It denotes the exchange rate between the New Zealand dollar and the US dollar. It is usually regarded as one significant indicator of the economic activities between New Zealand and the United States. Commodity prices, tourism, and the New Zealand trade balance drive the strength of the NZD. On the other side, the USD is driven by US indicators, Federal Reserve policies, and global risk sentiment. Relative strength in one or both can move the NZDUSD rate and indicate shifts in the economic health of these two nations.

New Zealand interest rate decision, August 14, 04:00 (GMT+2)

The interest rate of the Reserve Bank of New Zealand is expected to be at 5.50%. In reality, an unchanged rate would be considered favorable for economic stability, with no changes in investment or spending, which would further strengthen the NZD against the USD. If the rate is raised, it will result in a significant appreciation of the New Zealand dollar against the US dollar. This could indicate a more positive view on the economic outlook or inflationary concerns and lead to a rise in the NZDUSD exchange rate. An unexpected rate cut should be perceived as economic uncertainty. This will be followed by a weakening NZD and a fall in NZDUSD.

The Reserve Bank of New Zealand had its last meeting on July 10, and the interest rate remained unchanged. Nevertheless, NZDUSD experienced a sharp fall!

US Consumer Price Index (CPI) MoM, August 14, 14:30 (GMT+2)

The US CPI is expected to increase to 0.2% from the previous month’s -0.1%. If this forecast meets or exceeds expectations, indicating strong economic activity and potential inflationary pressures, the US dollar could strengthen as markets anticipate a possible rate hike by the Federal Reserve. Such a scenario usually results in a lower NZDUSD as a stronger US Dollar has a negative impact on the NZD. Alternatively, the USD might weaken if the CPI report falls below the anticipated 0.2%, suggesting less economic vigor than expected. A softening could boost the NZDUSD as confidence in the strength of the US economy weakens.

In the Daily timeframe, NZDUSD, which is in a long-term downtrend, has bounced off support and is consolidating near 38.2 Fibonacci resistance. Demarker rose above 0.300, breaking out of the oversold zone, although the overall sentiment remains exceptionally bearish.

• If the bulls push the price above 0.6000 resistance, the next target will be 0.6080 resistance, corresponding to 61.8 Fibonacci;
• A rebound from the resistance would take NZDUSD back to 0.5870 support;