The New Zealand Dollar has gained momentum in Tuesday’s Asian session, with positive risk sentiment weighing on the US Dollar and lifting NZD/USD. This increase in strength comes as investors await the PBoC rate decision ahead of Fedspeak on Tuesday. The People’s Bank of China (PBOC) recently left the one-year and five-year Loan Prime Rates (LPR) unchanged, leading to a favorable environment for the New Zealand Dollar.
Trade Balance and Economic Data
New Zealand’s Trade Balance data has shown a slight improvement, with a decrease in the deficit for the month of July. Exports decreased slightly, while imports saw an increase compared to previous readings. This mixed data could have an impact on the future performance of the New Zealand Dollar, especially in the face of global economic uncertainty.
Federal Reserve officials have been discussing the possibility of cutting US interest rates in September due to concerns about the weakening labor market. This speculation has led to market expectations of a 25 basis points Fed rate cut, with a nearly 77% chance of it happening in the upcoming meeting. The uncertainty around US monetary policy could further impact the value of the New Zealand Dollar in the coming days.
The NZD/USD pair has shown resilience in the face of global economic challenges, with a bullish trend on the daily chart. The pair broke above a descending trendline recently and is currently trading above the key 100-day Exponential Moving Average (EMA). The bullish 14-day Relative Strength Index (RSI) also indicates a positive outlook for the pair, supporting buyers in the short term.
Key Levels to Watch
In terms of key levels, a decisive break above the psychological level of 0.6100 could pave the way for further upside towards 0.6154 and 0.6222. On the downside, the 100-day EMA and descending trendline at 0.6050 will be crucial support levels to watch. A sustained break below this level could open the door for further losses towards 0.5974 and 0.5846.
The table below illustrates the percentage change of the US Dollar against other major currencies this week. The New Zealand Dollar has shown strength in comparison to the US Dollar, reflecting the positive momentum seen in recent trading sessions. The heat map also indicates the percentage changes of major currencies against each other, providing a visual representation of currency performance in the current market environment.