The New Zealand dollar continues to depreciate against the USD. Will this trend continue?
The weakness of the US economy increases pressure on its main benchmarks, such as the New Zealand dollar.
Last Thursday, two negative reports were published which depreciated the US dollar. These reports were on the number of unemployment claims, at 5% higher than expected by the market, and the GDP for the second quarter, which remained at 6.5% compared to a forecast of 8.5%.
In addition, the worsening coronavirus situation in the country attracts negative sentiment towards the USD, and detracts from the potential for the country's recovery.
This contrasts with the situation in New Zealand, which, while the country is virtually coronavirus-free, strict security measures for passenger and merchandise entry into the country are affecting its fundamental.
In recent hours, the government has decreed the effective suspension of the air travel bubble with Australia following the resurgence that has occurred in the neighbouring country.
All eyes are on the quarterly report on the evolution of employment in New Zealand that will be published next Wednesday, August 4.
This report could increase pressure on the Reserve Bank of New Zealand (RBNZ) to carry out a possible interest rate hike which some analysts had expected to have occurred in its last announcement in mid-July.
Source: Admirals MetaTrader 5, NZDUSD, daily - Data range: from 18 December 2020 to 2 August 2021, conducted on 2 August 2021 at 9:30 am CET. Please note: Past performance is not a reliable indicator of future results.
On NZD/USD daily chart above, it can clearly be seen that since the end of February, the pair has formed a wedge pattern with a downtrend.
This pattern is characterized by the fact that both the support and the resistance of this figure are marking increasingly lower levels. However, the fall in resistance is higher than that of the support, with both reference levels tending to converge.
Since June 18, the pair has been very close to the support level, and fails to recover positions. On that day, the overselling recorded in the RSI indicator served as a reference for traders to close their sell positions.
There have been some subsequent bearish attacks and they have even managed to overcome this support in a timely manner, but without consolidating and quickly returning to the original figure.
At the moment, the pair is looking for a new direction, so it would be interesting to monitor the support of this wedge located close to 0.691 USD per New Zealand dollar.
If it manages to stay above this level for several days, it is possible that buyers will re-enter the pair looking for the top of this bearish wedge, located close to 0.715 USD per New Zealand dollar.
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