NZD/USD Review: Indecisive market
|- Friday's doji candle indicates indecision in the NZD/USD market.
- The currency pair has created a narrowing price range since easy July.
- Focus on the RBNZ: The central bank is expected to keep the rates unchanged.
The NZD/USD pair created a doji candle on Friday, signaling indecision in the marketplace and was last seen trading largely unchanged on the day at 6747.
The CNY picked up a bid on Friday after the PBOC reintroduced a measure to halt the sell-off in the currency, helping the NZD/USD defend the support of the narrowing price range (pennant pattern). However, the gains remained elusive despite a below-forecast non-farm payrolls reading, courtesy of the escalating US-China trade tensions.
Focus on the RBNZ
The Reserve Bank of New Zealand (RBNZ) is poised to leave the benchmark Overnight Cash Rate (OCR) unchanged at its monetary policy meeting, scheduled this week.
An OCR cut is less likely as inflation is showing signs of life. However, a slowing economy and rising trade tensions will make it hard for the RBNZ to turn hawkish. As a result, the investors are expecting the central bank to reiterate its recent neutral messaging.
The NZD could spike if the RBNZ statement focuses on inflation. On the other hand, an increased focus on slowing economy could hurt the kiwi dollar.
NZD/USD Technical Levels
Daily chart
Currently, the top end of the pennant is located at 0.6847 and the lower end is seen at 0.6740. A pennant breakdown would signal a continuation of the sell-off from the high of 0.7060 (June 6 high). Meanwhile, a bullish breakout would signal a bearish-to-bullish trend change.
Resistance
R1: 0.6784 (20-day moving average)
R2: 0.68 (psychological level)
R3: 0.6847 (pennant resistance)
Support
S1: 0.6740 (pennant support)
S2: 0.6720 (Friday's doji low)
S3: 0.67 (psychological level)
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