The NZD/USD rates are in a high volatility mode, due to a number of geopolitical factors that have adversely affected the value of the dollar for a long time. Nevertheless, since January there has been a downtrend with no signs of completion.
The New Zealand dollar was one of the most vulnerable currencies, amid the strengthening of the dollar against all major currencies and an increase in the demand for risky assets. The sharp fall in the value of the NZD was facilitated by unconvincing economic statistics in New Zealand - the inflation rate didn't achieve the set target, which decreases the probability of a rate increase by the RBNZ in the near future to zero. The US dollar, on the contrary, looks perfect compared to the situation with the NZD: geopolitical factors are no longer putting pressure on the dollar, while strong macroeconomic statistics impress the market and increase the likelihood of a rate hike by the FED.
This week the strengthening of the dollar continued and the value of the NZD reached a minimum for the last 5 months. New data on the secondary real estate market in the United States came in higher than expected, showing a significant increase in sales. The sales of new housing in March also increased,exceeding the expectations of investors twice. Consumer confidence and business activity indices (PMI) also rose exceeding expectations. Geopolitical risks were also reduced: North Korea announced the suspension of nuclear tests during the upcoming negotiations with the United States and South Korea. In addition, tensions in trade relations between China and the United States are decreasing.There is also peace among neighbours: the USA signed a new trade agreement with Mexico. It should be noted also that there is a decrease in the expectations that Central Banks affecting the main currencies will actively raise interest rates this year, given the growth of the economy which is good news for the USD also.
Thus, the USD enjoyed many factors that positively affect its value, and it was simply impossible to resist against that. The oscillators (MACD, RSI, Stochastic) unanimously indicate the rates in the oversold zone and show a strong buy signal. However, it should be noted that the dollar's potential for growth has not yet been exhausted. This Friday the dollar will be able to get a new stimulus to growth with the release of GDP data. The index of unfinished sales in the real estate market, which will be published on Monday, is also likely to have a positive impact on the value of the USD, taking into account the previous data on the real estate market for March. In this situation, the most optimal would be the deals on the trend in favor of the US dollar.
