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The NZD/USD pair has not been understood for a long time, partly due to the fact that this trading instrument is not as popular as the EUR/USD and GBP/USD pairs. Nevertheless, all dollar pairs are interesting in their own way and show the state of the main world currency, namely the US dollar. Early this morning, the Reserve Bank of New Zealand (RBNZ) announced its decision on interest rates after its regular meeting. The New Zealand regulator did not make any changes to its monetary policy and kept the main interest rate at the previous level of 0.25%. At the same time, the volume of the large-scale asset purchase program, which amounts to $ 100 billion, remains unchanged either.
The RBNZ will continue to implement this program and the financing program for issuing loans until June 2022. These steps are primarily aimed at supporting the national economy from the consequences of the COVID-19 pandemic. At the same time, the Monetary Policy Committee of the RBNZ emphasized again that such a strategy will be implemented until inflation and employment reach pre-pandemic levels. In other words, this process will take quite some time. To conclude the fundamental background, we will highlight today's speech of the US Federal Reserve System (FRS) Chair Jerome Powell, which is scheduled for 16:00 Universal time. Now, let's move on to analyzing price charts and let's begin with the weekly time frame.
Weekly TF
It can be clearly seen in this time frame that the pair really turned downwards after the outlined candlestick signal appeared, which was formed upon reaching the level of 0.7461. However, the strong, significant psychological and technical level of 0.7000 prevented the further plans of the bears on the New Zealand dollar. It was around this round level that the fierce struggle of the opposing sides began. It should be noted that the already significant level was strengthened by the Kijun line of the Ichimoku indicator, which is located directly above the 0.7000 mark and provided additional and very significant support.
Currently, it shows that the NZD/USD pair is trading above the level of 0.70, namely around the 0.7090 mark. In case that the current week ends with a sharp and full bullish candle, it can be assumed the subsequent growth of the quote, the target of which will be the red line of the Tenkan Ichimoku indicator, passing at another extremely important level for market participants (0.7200). Given the current price, the way towards this target level is certainly not close, but this can be reached judging by the weekly scale. To continue the bearish mood, the price needs to decline below the level of 0.7000. After that, the bears will have to break through a fairly strong support level of 0.6940.
Daily TF
Looking at this time frame, it is recommended to pay attention to how confidently the red line of the Ichimoku Tenkan indicator unfolds (or has already unfolded) after the price. This factor indicates further growth potential of the New Zealand dollar against the US dollar. As one can observe, the pair is quite sharply rising, as the market participants favored the decision and comments of the RBNZ. Now, a breakdown of the black 89 exponential moving average is taking place, and if successful, the pair will test the strength of the blue Kijun line, which is located at 0.7103. According to long-term observation of this currency pair, there is every reason to highlight not only the level of 0.7000, but two other levels set at 0.7100 and 0.7200. It is usually within these marks that price reversals and trend changes took place.
Given the overall technical picture, the main trading recommendation is to buy after a true breakdown of 0.7100 on a pullback to this level. It is possible to buy at lower prices in the case of short-term declines in the price range of 0.7080-0.7065. But if the level of 0.7100 is not broken and there are bearish candlestick signals on this or more on the smaller time frames, then this will be a signal to open sales, but with just small targets for now. The same applies to the opening of sales at the level of 0.7200.
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