Progress in trade negotiations between the United States and China contributed to the growth of world stock indices and the weakening of the U.S. dollar.
U.S. President Donald Trump tweeted last Sunday that he intends to postpone the increase in fees scheduled for March 1, explaining that there has been significant progress towards a trade agreement. The new trade agreement between the two countries will end the trade war and revive investor optimism, pushing global stock markets to accelerate recovery after falling in the fourth quarter.
China's leading stock indexes ended the trading session on Monday at new heights, thanks to optimism about the U.S.-China trade negotiations.
Leading stock indicators of the country on Monday rose by about 5.5%. For the Chinese stock exchanges, this was the best trading day since 2015. At the same time, the U.S. dollar resumed its decline on Monday, including against the yuan and major commodity currencies, such as the Canadian, Australian, New Zealand dollars.
The NZD/USD was trading at the beginning of the European session near the level of 0.6890, which is 0.5% higher than the closing price of the previous week (at the level of 0.6842). Data published early on Monday on the growth of retail sales in New Zealand in the fourth quarter compared to the third quarter (by 1.7% while the growth forecast was +0.5% and +0.3% in the previous quarter), also contributed to the rise of the New Zealand dollar.
On Tuesday and Wednesday, Fed Chairman Jerome Powell will give a speech in the U.S. Congress. If he shows a tendency toward a softer monetary policy, the U.S. dollar will continue to decline, including against the NZD.
Meanwhile, NZD/USD is developing a positive trend above key support levels of 0.6860 (Fibonacci level 23.6% of the upward correction to the global wave of the pair's decline from the level of 0.8800, started in July 2014; wave minima are near the level of 0.6260), 0.6815 (ЕМА200 on daily chart). Growth targets are resistance levels of 0.6970 (December highs and EMA144 on the weekly chart), 0.7070 (EMA200 on the weekly chart).
So far, positive dynamics prevail. Above the support level of 0.6815 long positions are preferable.
Support Levels: 0.6860, 0.6815, 0.6785, 0.6745, 0.6710, 0.6655, 0.6515, 0.6430
Resistance Levels: 0.6900, 0.6970, 0.7070
Trading recommendations
Sell Stop 0.6850. Stop-Loss 0.6910. Take-Profit 0.6815, 0.6785, 0.6745, 0.6710, 0.6655, 0.6515, 0.6430
Buy Stop 0.6910. Stop Loss 0.6850. Take-Profit 0.6970, 0.7070
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