NZD/USD: general analysis

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04/07/2020

Current trend

Today, the NZD/USD pair slightly strengthened before the American labor market data release. Employment dynamics indicate that in April actual unemployment may exceed 15%, which will lead to an extreme drop in personal expenses, which occupy more than half of the country's GDP. Also, commodity currencies respond positively to increased interest in risk due to a decrease in the spread of infection in the US and Europe. However, in Japan, with which New Zealand is trading closely, the situation is worse. NZD is also affected by negative trends in national business, as evidenced by a record drop in business confidence in March. A decrease in demand for national products may harm overall economic activity, forcing traders to abandon NZD for USD or gold.

Today at 16:00 (GMT+2), US JOLTs Job Openings will be published, however, in a pandemic; this release cannot serve as an adequate forecast for the future. Tomorrow, traders will focus on FOMC Meeting Minutes at 20:00 (GMT+2). The pandemic remains the main driver of the market, while the slowdown in the distribution dynamics in the US and Europe will provide moderate support for commodity currencies in the short term.

Support and resistance

On a 4-hour chart, the instrument tests a resistance of 0.6000. Bollinger Bands reverse upwards, and the price range expands, which indicates the growth. MACD weakly reflects the formation of an uptrend. Stochastic left the oversold zone, generating a sell signal.

Resistance levels: 0.6000, 0.6110, 0.6245, 0.6445.

Support levels: 0.5920, 0.5827, 0.5700, 0.5583.

Trading tips

Short positions may be opened from the current level with the target at 0.5775 and stop loss 0.6080. Implementation period: 2–3 days.

Long positions may be opened above 0.6070 with the target at 0.6250 and stop loss 0.5970. Implementation period: 1–3 days.

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