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NZDUSD Waiting for US Labor Market Data

9/2/2022 3:41 PM

This week, the NZD/USD pair continued to decline and is currently at 0.6990.

Pressure on the New Zealand dollar, as well as on other commodity currencies, is exerted by increasing signs of a global economic downturn, which may reduce demand for dairy products exported from the country. Thus, weak August data on business activity in China were released this week, where the index for industry remained in the stagnation zone for the second month in a row (49.4%), and inflation in the eurozone increased to 9.1% in August. The latest New Zealand statistics also did not turn out to be positive: the volume of exports of New Zealand goods and services amounted to 23.3B NZD, which is more than 21.1B NZD for the same period a year earlier, but imports in June also increased to 25.5B NZD, which is significantly more than last year's 20.4B NZD.

The US currency as a whole looks more attractive for investment. The position of the USD is strengthening due to the continuation of the tightening of the monetary policy of the US Fed, which was announced last week by the head of the regulator Jerome Powell, as well as against the background of the stable position of the American economy in the face of rising interest rates. Today, investors are waiting for the publication of August US labor market data. It is likely that the unemployment rate will remain at 3.5%, employment will slow down from 528.0K to 300.0K, but it will still be significant. The implementation of forecasts may provide additional support to the USD.  

The NZD/USD pair is trading within a wide descending channel, and if the price consolidates below the level of 0.6080 (Fibo expansion 61.8%), the decline can continue up to the level of 0.5980 (Murray [-2/8]). The key for the "bulls" is the level of 0.6164 (Murray [1/8]), the breakout of which will give the prospect of growth to the levels of 0.6225 (Murray [2/8], the middle line of the Bollinger Bands), 0.6290 (Murray [3/8], Fibo retracement 61.8%).

Technical indicators point out the continuation of the downward trend: the Bollinger Bands are directed downwards, the MACD histogram is increasing in the negative zone, and the Stochastic may leave the oversold zone, but the potential for corrective growth looks limited.

Resistance levels: 0.6164, 0.6225, 0.6290. | Support levels: 0.6080, 0.5980.

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