Today, we present you a mid-term investment overview of the pair NZD/USD.

The fundamental background has developed in such a way that the positions of the New Zealand currency at the moment look much weaker than the USD, despite the fact that the latter is held near the annual lows of 102,000 points in the USD Index. In the middle of last month, the Reserve Bank of New Zealand decided to keep the interest rate at 5.50%. Mainly, this measure is a reaction to, although not significant, but still a slowdown in inflation, which, according to the report for Q2, fell to the current 6.0% from 6.7% earlier, however, the financial authorities do not rule out further tightening of monetary incentives if the negative trend resumes. The pause in the "hawkish" cycle will certainly have a positive impact on the national economy, which is in recession, declining for two consecutive quarters. One of the main reasons for the correction of indicators is still high unemployment, which, according to today's report, rose to 3.6% from 3.4% earlier, while the wage dynamics index added only 1.1%, which led to a change in the annual value from 4.5% to 4.3%.

The stabilization of the US currency is likely to continue in response to the actions of the US Fed, which, through the tightening of monetary parameters, intends to return inflation to the 2.0% range by the beginning of 2024. Most likely, the regulator will alternate minimal interest rate increases with its preservation, therefore, after a recent increase of 25 basis points, it can be expected to be fixed at the next meeting, which is indicated with 84.5% probability by the Chicago Mercantile Exchange (CME) FedWatch Tool, and only 15.5% of respondents believe that the US Fed will again adjust the value. Thus, there are more and more supporters of such a monetary policy, which has a positive effect on the dollar quotes, which are approaching 102.0 points in the USD Index. 

Taking into account all these factors, the growth of the NZD/USD currency pair is unlikely in the near future, and the main scenario is to consider positions for a decline.  

In addition to the underlying fundamental factors, technical indicators signal a further decline in the NZD/USD pair: on the weekly chart, the price is held in a global descending channel with dynamic boundaries of 0.6340–0.5800 and, pushing off from the resistance line, falls to an annual minimum of 0.6000.

As you can see on the chart, it is the consolidation below this minimum that will be the key signal for the continuation of global sales.

Key levels can be seen on the daily timeframe.

Another downward wave continues to form inside the global channel, and the price is approaching two key lows of 0.6060 and 0.6000, consolidation below which will indicate a further decline. In the area of the 0.6420 mark, there is a zone of global cancellation of the sell signal, in case of reaching which the global downward scenario will be canceled, and the sell positions should be liquidated. In the area of the minimum of March 20, 2020, which is located at 0.5740, there is a target zone, in case of reaching which it is necessary to fix profits on open sell positions.

In more detail, the levels of entry into transactions should be evaluated on a four-hour chart.

The entry level of the sale transaction is located at 0.6120, which has already been passed by the price. Thus, a local sell signal has already been received, and it remains to wait for its full fixation after overcoming the lows described above.

Taking into account the average daily volatility of the NZD/USD pair over the past month, which is 47.5 points, the price movement to the target zone of 0.5740 may take approximately 42 trading sessions, however, with its increase, this time may be reduced to 36 trading days.