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New Zealand Dollar Recovers

2/7/2023 11:10 AM

During the Asian session, the NZD/USD pair is growing moderately, developing the "bullish" momentum, and is testing 0.6320 for a breakout, retreating from its month's lows, renewed on Monday.

The reason for the upward dynamics is technical factors, while the macroeconomic background from the US remains quite calm. The US currency is supported by a strong report on the US labor market, released at the end of last week, which reflected the creation of 517.0K new jobs outside the agricultural sector, which was more than twice better than market expectations, while the unemployment rate fell to the new record low of 3.4% with a forecast of growth to 3.6%. Against the backdrop of publications, investors began to doubt that the US Federal Reserve would retreat from its "hawkish" rhetoric: earlier, the regulator increased the interest rate by 25.0 basis points but indicated that the values would remain at these levels for a long time, but now analysts expect at least another one increase by the same amount in March.

The results of the meeting of the Reserve Bank of Australia (RBA) on Tuesday somewhat supported the New Zealand dollar: as expected, the regulator raised the interest rate by 25.0 basis points to 3.35%, the highest since 2012, and also signaled in favor of further tightening of monetary policy in the short term to fight inflation. The agency expects consumer prices to rise around 4.75% YoY this year and slow down to the area of 3.0% by mid-2025.

On the daily chart, Bollinger bands are trying to reverse into a horizontal plane: the price range is expanding from below but not as fast as the market activity develops. The MACD indicator is falling, keeping a relatively strong sell signal (the histogram is below the signal line), and is trying to consolidate below the zero line. Stochastic shows similar dynamics, but the indicator line is close to its lows, indicating that the New Zealand dollar may become oversold in the ultra-short term.

Resistance levels: 0.6350, 0.6400, 0.6450, 0.6500. | Support levels: 0.6288, 0.6250, 0.6200, 0.6155.

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