NZD/USD forecast: Kiwi’s path of the least resistance is lower
- The NZD/USD pair has been in a strong bearish trend.
- New Zealand’s consumer confidence plummeted in June.
- Its trade surplus narrowed due to higher energy prices.
The NZD/USD price continued its bearish trend as investors focused on the weak consumer confidence and strong New Zealand trade data. The pair slipped to a low of 0.6240, which was the lowest level since June 16th of this year.
New Zealand consumer confidence
New Zealand, like other developed countries, is going through a difficult period as inflation surges. As a result, both business and households are having low confidence about the economy.
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Data published by Westpac Bank showed that the country’s consumer confidence plummeted to a record low in June. The consumer confidence index dropped from 92.1 in March to 78.7. That drop was worse than the average of 110.2.
The present conditions index and the expected conditions index fell to 74.0 and 81.8, respectively. The report cited the soaring cost of living and the fact that many workers are seeing slow wage growth.
Recent data shows that most products have become more expensive in the past few months. With the RBNZ hiking rates, mortgage rates have jumped sharply. Homes have become unaffordable to most people in New Zealand.
The NZD/USD price has dropped even after some encouraging trade numbers. According to the statistics agency, New Zealand exported goods worth more than NZ$6.95 billion in May. In the same period, it imported goods worth NZ$6.69 billion, bringing the overall trade surplus to over NZ$$263 million. This surplus was lower than April’s NZ$440 million.
The next key catalyst for the NZD to USD price will be the upcoming testimony by Jerome Powel. The Fed Chair is expected to reiterate that the bank was prepared to keep hiking interest rates in a bid to fight inflation. Last week, the Fed hiked rates by 0.75% and hinted that more hikes were coming.
The hourly chart shows that the NZD/USD price has been in a strong bearish trend in the past few days. The pair managed to move below the important support level at 0.6271, which was the lowest level on June 22nd. It has moved below the 25-day and 50-day moving averages while the MACD has moved below the neutral level.
The New Zealand dollar will continue falling as bears target the key support level at 0.6180. On the flip side a move above the resistance at 0.6275 will invalidate the bearish trend.
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