At the end of March there was a trend reversal in favor of the USD. There is a rapid downtrend, which is likely to continue in the near future. The New Zealand economy was under pressure due to the trade conflict between China and the United States, as well as due to the slowdown in the Chinese economy.
This week the NZD found itself under pressure, with the RBNZ's decision to lower the rate to the historic low of 1.5%. In addition, the regulator did not exclude a further reduction of the rate. The NZD decreased against the dollar also because of Donald Trump's threats to impose trade duties on goods from China, which raised investors' concerns about negotiations on the trade deal. The latest data on China's economy were also negative for the NZD: the trade surplus in April fell more than twice compared to the previous month, and twice less than the forecasts. As a result, almost all commodity currencies lost in value.
The USD is also under pressure due to the growing demand for safe assets, which is entirely due to the US policy. However, the USD can always count on support from macroeconomic reports, which, for example, happened yesterday, with the release of data on the number of open vacancies on the labor market. Tomorrow is expected to be a more saturated with news period, as we expect reports about the trade balance of the United States and the consumer price index. Investors also expect the speech of the FED head, although the Fed's policy nowadays does not contribute to the strengthening of the USD.
In this situation, the most optimal would be the deals in favor of the USD, given the high probability of a failure in the negotiations on the conclusion of a trade deal, as well as given the weakness of New Zealand's economy. Most technical analysis tools, including the Stochastic oscillator also show the efficiency of short deals in the near future.
