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NZDUSD is in a correction

8/2/2022 3:32 PM

The growing fears of market participants about a possible global economic downturn are the key factor in the decline of the NZD/USD pair to 0.6280.

The redirection of capital from risky assets and the emergence of investors' interest in the US dollar, which is traditional for such cases, leads to a further decrease in the trading instrument to the area of ​​0.6205. However, the dynamics may be corrective, as the likelihood that the US Federal Reserve will reduce the pace of monetary tightening and will not raise interest rates as aggressively as previously thought, along with falling Treasury yields, may limit the recovery of the national currency.

This week, investors are looking forward to the publication of the Global Dairy Trade price index in New Zealand, as well as Q2 data on changes in employment and the unemployment rate: employment may rise by 0.4% compared to the previous period, and the unemployment rate is expected to will decrease by 0.1% to 3.1%. If the actual value justifies the experts' forecasts or turns out to be better than them, the New Zealand currency may strengthen to 0.6385.

The long-term trend is downwards, and now an upward correction is developing, the likely target of which is a test of 0.6385. If traders hold it, then the downward dynamics will increase with the targets at 0.6205 and 0.6055, and in case of a breakout, the price will go to test the trend's key resistance around ​​0.6570.

The medium-term trend is upwards, but after testing the target zone 2 (0.6341–0.6327), the price went into a correction with a possible target at the key trend support of 0.6212–0.6198. After passing this range, the quotes will have the opportunity to renew the high of the current week around ​​0.6350.

Resistance levels: 0.6385, 0.6570. | Support levels: 0.6205, 0.6055.

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