NZD/USD has experienced pressure on Monday as the U.S. dollar edged higher, trading in a tight range ahead of remarks by Federal Reserve chair Jerome Powell later in the session, just a few days after the U.S. central bank began the tightening process.
The greenback was further bolstered by the Fed's announcement last week that it would raise rates at all six remaining meetings in 2022. Further fueling USD bulls were hawkish comments by influential members of the FOMC and elevated U.S. Treasury bond yields.
As part of the NZIER Consensus Forecast released last week, the economy's outlook for the next few months has been revised upward. However, softer growth is expected to occur throughout the rest of the year.
New Zealand's Trade Balance deficit was reported as $-7.77B to $-837B, although it improved monthly to $-385M from $-1126M. In light of the commodities market shock, the differences between monthly and annual data have caused the pair to face firm resistance at four-month highs. Exports were diverse as Imports decreased from $5.92B to $5.88B, while Exports increased past the previous reading of $4.88B to $5.49B.
Technical view
NZD/USD buyers held the 200-day exponential moving average on Monday to reclaim the previous top following a successful pullback from the 50-day exponential moving average. The pair trades in a descending channel on the daily chart. After rebounding from the channel's support line, and a successful pullback from the 50-day exponential moving average, buyers pushed the price above the 200-day exponential moving average on Friday.
There is currently a desire among buyers to maintain the ground above this hurdle in an effort to reclaim the previous top at 0.69241. Should bulls successfully break through this barrier, the following resistance will be found at 0.69550. A break of this level could lead to intensifying bullish momentum that could take the NZD/USD to 0.69850 before facing the 0.7042 near the upper line of the channel.
On the flip side, if sellers are getting stronger, then they can drag the price below the 200-day EMA in the vicinity of 0.68550. Assuming that the 200-day EMA is broken, further drops are likely towards the next support at 0.68270; if this support fails to hold, the 50-day EMA will serve as the next barrier. This will be a strong bearish signal if there is a decisive break below the previous bottom of 0.67320.
The momentum oscillators suggest a bearish bias. At the same time, buyers seemed to take a breather with RSI hovering in the buying region but pointing down. Also, momentum is moving above the 100-threshold but is retreating from its peak, implying fading bullish sentiment. Likewise, positive MACD bars are growing above the signal line.