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New Zealand Dollar Remains under Pressure

3/27/2023 12:50 PM

Last week, the NZD/USD pair failed to consolidate above the 0.6270 resistance level, despite the softening of the “hawkish” rhetoric of the US Federal Reserve.

Against the bankruptcy of the American Silicon Valley Bank and Signature Bank, as well as the sale of Credit Suisse AG, the American regulator decided not to raise the interest rate by 50 basis points, as previously planned, so as not to create pressure on the financial sector, and limited itself to a correction of 25 basis points, warning investors of a possible tightening of monetary policy in the future. Investors took the news negatively and all risk assets strengthened momentarily, however, NZD/USD failed to show significant gains and remained below 0.6270, ending last week below the opening of trading.

This week, the negative dynamics may continue against risks of a slowdown in the global economy and its transition to recession. A factor that could support the New Zealand currency is that the country's Reserve Bank is still far from the peak of the interest rate and will maintain the “hawkish” rhetoric, probably longer than the US Federal Reserve. The rapidly recovering Chinese economy is also able to prevent the fall of quotations, so the sales target is around 0.6085 and 0.5995 levels.

The long-term trend is downward. After holding the support level of 0.6085, the trading instrument corrected to the resistance level of 0.6270, could not break it, and began to retreat to 0.6085, after the breakdown of which, the next target will be 0.5995.

The medium-term trend is downward. Last week, market participants unsuccessfully tried to break through the key trend resistance 0.6282–0.6264, and the price began to decline to the March low of 0.6088, after consolidation below which the negative dynamics may continue to zone 3 (0.5998–0.5980).

Resistance levels: 0.6270, 0.6530. | Support levels: 0.6085, 0.5955.

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