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The New Zealand Dollar is Developing an Uptrend

1/23/2023 10:49 AM

During the Asian session, the NZD/USD pair shows ambiguous dynamics, consolidating near the level of 0.6470.

The US currency is under pressure from last week's poor macroeconomic data: retail sales fell short of expectations, although Friday's data on the volume of transactions in the existing home market in December showed a contraction of 1.5% after a sharp decline of 7.9% in the past month compared to forecasts of –5.4%. Investors are predicting the steps of the US Federal Reserve regarding changes in the course of monetary policy, which can be made already at the February meeting. The inflation statistics renewed October 2021 low: the annual rate continued to slow down after 7.1% in November, 7.7% in October, 8.2% in September, and the June high of 9.1%. Many analysts believe that the interest rate increase step would not exceed 25.0 basis points, which, in turn, is confirmed by the data of the Chicago Mercantile Exchange (CME Group) FedWatch Instrument.

This week, the market will monitor the dynamics of the US Q4 gross domestic product (GDP) on Thursday, which is expected to slow down from 3.2% to 2.8%. Also, data on the volume of orders for durable goods for December will be released simultaneously.

On the daily chart, Bollinger bands are growing moderately: the price range is expanding but not as fast as the "bullish" activity develops. The MACD indicator rises, keeping a relatively strong buy signal (the histogram is above the signal line). Stochastic reverses into an upward plane, forming a new buy signal, but earlier, it maintained a confident downward direction, signaling that the New Zealand dollar might become overbought in the ultra-short term.

Resistance levels: 0.6500, 0.6535, 0.6600, 0.6650. | Support levels: 0.6450, 0.6400, 0.6350, 0.6288.

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