NZD/USD Dilemma: Lockdown Lift and Dampened Commodity Sentiment

NZD/USD does not seems to be benefiting from New Zealand's planned lockdown lift and upbeat CPI data...

Yesterday (April 20), the New Zealand dollar outperformed other major currencies against the greenback, gaining 0.2% compared with the prior session. New Zealand Prime Minister Jacinda Ardern said the coronavirus alert level 4 lockdown in the country will end in a week, where key sectors will resume operations. Meanwhile, a day before, government data showed that New Zealand consumer inflation grew 2.5% on year in the first quarter, the strongest since 2011 and higher than 2.1% growth expected.

However, NZD/USD, widely considered as a commodity pairing, performance does not seem to be convincing so far this week, as the recent slump in oil prices has dampened sentiment in commodity-linked currencies.

From a technical point of view, the longer term outlook for NZD/USD remains skewed to the downside as shown on the daily chart. The pair is trading with in a bearish rising wedge pattern, while the upside potential is also likely to be limited by a declining trend line drawn from December last year. Below the nearest resistance at 0.6260, and a downside break out from the wedge would suggest that potentially it is heading downward to the first and second support at 0.5840 and 0.5690 respectively. In an alternative scenario, a break above 0.6260 might open a path to the month-high in March at 0.6450 on the upside.

Source:  Tradingview, GAIN capital

Build your confidence risk free

More from Forex

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.