In mid-July, the NZD/USD pair broke through the key resistance level of 0.6710 (ЕМА200 on the daily chart) and continued to rise against the background of the weakening US dollar. Growth stopped at 0.6790, almost a 4-month high.
The upper line of the ascending channel on the daily chart also passes through this mark. There was a rebound from it into the channel and to its lower boundary, passing near the level of 0.6610, where NZD / USD is now trading.
Investors are waiting for the outcome of the two-day Fed meeting, which will end on Wednesday with the publication (at 18:00 GMT) of an interest rate decision. Probably, the Fed will reduce the interest rate by 25 basis points (to 2.25%). However, the markets have already taken into account in the quotations the reduction of the rate by 0.25%, and if the Fed does not give a strong signal about the further easing of its monetary policy, the dollar decline may have a short-term character.
Steadily weak inflation is the main and, perhaps, so far the only negative domestic economic factor that can affect the Fed’s decision to lower the rate more strongly. Among other negative factors are the uncertainty in US trade relations with China and the risks of a slowdown in the global economy.
At 18:30 (GMT), a press conference on the results of the Fed meeting will begin. Signals from Fed Chairman Jerome Powell, aimed at the likelihood of further easing of monetary policy, will cause the dollar to fall. Otherwise, after a short-term decline, the dollar is likely to resume growth, and the NZD / USD pair will decline.
In this case, the decline in NZD / USD is likely to resume after a small short-term correction.
After the breakdown of the local support level of 0.6585, NZD / USD will head towards the annual minimum near the 0.6490 mark. More distant targets of decline are located at support levels of 0.6430 (2018 lows), 0.6260 (Fibonacci 0% level and minima of the global decline pair from 0.8820).
The signal for the resumption of long positions will be the breakdown of the short-term resistance level of 0.6659 (ЕМА200 on the 1-hour and 4-hour charts) with targets at the resistance levels of 0.6680 (ЕМА144), 0.6710 (ЕМА200 and the middle of the rising channel on the daily chart). Further growth of NZD / USD is unlikely, and short positions are preferred below the local support level of 0.6610.
Support Levels: 0.6610, 0.6585, 0.6560, 0.6490, 0.6430, 0.6400, 0.6300, 0.6260
Resistance Levels: 0.6659, 0.6680, 0.6710, 0.6790, 0.6865, 0.6910
Trading Recommendations
Sell Stop 0.6580. Stop Loss 0.6635. Take-Profit 0.6560, 0.6490, 0.6430, 0.6400, 0.6300, 0.6260
Buy Stop 0.6635. Stop Loss 0.6580. Take-Profit 0.6659, 0.6680, 0.6710
