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NZD/USD: Bears breached through 0.5900, landing at multi-month lows

  • NZD/USD fell to its lowest point since November 2022, below 0.5900  then settled back above.
  • US yields rose after Powell’s words at the Jackson Hole Symposium.
  • Swaps markets reprice chances of a hike by the Fed in November and December.

In Friday’s session, the USD is one of the top performers, helped by a hawkish remark by the Federal Reserve (Fed) chairman at the Jackson Hole Symposium. On the other hand, New Zealand’s calendar had nothing relevant to offer. Eyes on potential Chinese government support to the real state sector of China.

After markets being cautious during the week, looking for clues regarding the next Fed’s moves, Chair Powell gave some clarity. He pointed out that the bank will retain its policy at restrictive levels until the economy shows signs of cooling down, accompanied by lower inflation. He then commented that the Fed will proceed carefully concerning the incoming data regarding the next decisions.

That being said, Thomas Barking and Loretta Mester also spoke. Barkin commented that the Fed will “clearly hold” through the end of the year, while Mester stated that the bank probably has some more work to do. In addition, the latter stated that she doesn’t see the Fed cutting in 2024.

As a reaction, according to the CME FedWatch, markets are buying the hawkish rhetoric, with the odds of a 25 basis point (bps) hike rising to nearly 44%. In line with that, the 2,5 and 10-year  US Treasury yields rose to 5.07%, 4.46% and 4.23% respectively, boosting the USD.

On the Kiwi side, it faced selling pressure during the week due to the Chinese economic woes, as China is one of its biggest trading partners. That said, reports suggest that the Chinese government will take action to relieve the housing sector. Those measures aim to encourage homebuying by removing restrictions on first-time buyers and providing tax rebates. Still, their effectiveness is limited due to existing market challenges and investor scepticism, as reflected in the continued poor performance of China's equities.

NZD/USD Levels to watch

Analysing the daily chart, the NZD/USD technical outlook is bearish in the short term. The Relative Strength Index (RSI) is comfortably positioned below its midline in negative territory. It has a southward slope, indicating a strong selling momentum. It is further supported by the negative signal from the Moving Average Convergence Divergence (MACD), which displays red bars, underscoring the growing bearish momentum. Additionally, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), highlighting the continued dominance of bears on the broader scale.

Support levels: 0.5885, 0.5850, 0.5830.

Resistance levels: 0.5940, 0.5970, 0.6000 (20-day SMA).

NZD/USD Daily chart

NZD/USD

Overview
Today last price0.5909
Today Daily Change-0.0014
Today Daily Change %-0.24
Today daily open0.5923
 
Trends
Daily SMA200.6024
Daily SMA500.6131
Daily SMA1000.6155
Daily SMA2000.6228
 
Levels
Previous Daily High0.5982
Previous Daily Low0.5916
Previous Weekly High0.5997
Previous Weekly Low0.5903
Previous Monthly High0.6413
Previous Monthly Low0.612
Daily Fibonacci 38.2%0.5941
Daily Fibonacci 61.8%0.5957
Daily Pivot Point S10.5899
Daily Pivot Point S20.5874
Daily Pivot Point S30.5833
Daily Pivot Point R10.5965
Daily Pivot Point R20.6006
Daily Pivot Point R30.6031

Author

Patricio Martín

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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