NZD/USD Price Analysis: Posts fresh 10-week high near 0.6160 on China’s fresh stimulus
- NZD/USD strengthens on weak US Dollar and China’s announcement of stimulus to revive property sector.
- Market speculation for Fed reducing interest rates from September has weakened.
- NZD/USD approaches the crucial resistance of 0.6220.
The NZD/USD pair refreshes its 10-week high at 0.6165 in Tuesday’s European session. The Kiwi asset strengthens on multiple tailwinds such as soft US Dollar and China’s announcement of fresh stimulus measures to boost demand for its beleaguered housing sector.
The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, has extended its downside to 104.50. The US Dollar fails to capitalize on diminished expectations over the Federal Reserve (Fed) starting to reduce interest rates from the September meeting. The decline in market speculation for Fed rate cuts in September is the outcome of a strong United States (US) economic outlook and policymakers’ hawkish stance on the interest rate outlook.
Meanwhile, the New Zealand Dollar strengthened after China’s Shanghai announced several measures to revive the housing sector from the crisis. The administration acknowledges cutting down payment requirements, lowering minimum mortgage rates, and restrictions on home purchases will be eased. Being a proxy to China’s economy, the appeal for the New Zealand Dollar improves.
On the domestic front, investors await the NZ Budget Release that will indicate the scale of spendings, borrowing and revenue collection by the government.
NZD/USD is approaching the horizontal resistance plotted from February 22 high around 0.6220. The Kiwi asset strengthened after a bullish crossover of the 20 and 50-day Exponential Moving Averages (EMAs) around 0.6020, which suggested that a bullish trend has been triggered.
The 14-period Relative Strength Index (RSI) shifts comfortably into the bullish range of 60.00-80.00, indicating that the momentum has leaned toward the upside.
An upside move above the round-level resistance of 0.6200 will drive the asset January 15 high near 0.6250, followed by January 12 high near 0.6280.
On the contrary, fresh downside would appear if the asset breaks below April 4 high around 0.6050 This would drag the asset towards the psychological support of 0.6000 and April 25 high at 0.5969.
NZD/USD daily chart
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
