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NZDUSD Trades in the Support Area of 0.6310

2/13/2023 12:04 PM

Since last week, the NZD/USD pair has been holding at 0.6310.

After a strong US jobs report earlier this month, risky assets pulled back from recent highs amid US Fed's rhetoric to keep interest rates high for longer, even though inflation has topped out and is starting to fall. Officials fear that the trend will turn out to be unsustainable, and if financial conditions in the country continue to worsen and create new preconditions for consumer price growth, the figure could be adjusted to 5.0–5.5%. Market participants expect the publication of renewed data on Tuesday: according to experts, the index will increase from 0.1% to 0.4% MoM and decrease from 6.5% to 6.2% YoY, while the core value will remain at 0.4% MoM and decrease from 5.7% to 5.5% YoY. The implementation of the forecasts will allow the asset to rise to 0.6500 and above. Otherwise, the downward corrective movement will continue with the target at 0.6210.

Investors are awaiting the Reserve Bank of New Zealand (RBNZ) monetary policy decision on Wednesday: the tone of the regulator's message will be as important as the decision to raise interest rates by 0.75%, 0.50%, or 0.25%. Market consensus is now down 0.50% to 4.75%, but several economists suggest a slower pace of growth of 0.25% following the recent strong inflation and jobs data for the December quarter. If the RBNZ raises the rate by 0.50% or more, the growth of the NZD/USD pair is expected, and an increase of 0.25% and comments that inflation in the country is slowing down will be a negative factor for quotes.

The long-term trend is upward. Since last week, the price has been unsuccessfully trying to break the support level of 0.6310, and in case of its breakdown, the quotes will fall to the area of the trend's key support of 0.6210.

The medium-term trend reversed downwards after breaking the target zone 0.6358–0.6340. Now, the sell target is zone 2 (0.6178–0.6160), and short positions may be opened from the key resistance 0.6468–0.6450 with the target at last week's low 0.6270.

Resistance levels: 0.6500, 0.6600, 0.6750. | Support levels: 0.6310, 0.6210, 0.6085.

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