The NZD/USD rates remain near a 3-year high, but cannot find enough incentives for further growth. Since February, we have observed a complete loss of upward momentum and the formation of a flat trend in the range of 0.6942 - 0.7442 USD. In April, the volatility decreased even more, which led to a narrowing of the range to 0.7115-0.7306 USD. Both currencies are quite strong at the moment. Therefore, it is unlikely that the situation will change significantly in the near future. Demand for commodity assets remains as high as ever, and the USD is supported by strong macroeconomic reports.
Over the past week the New Zealand dollar has strengthened thanks to unexpected news from the RBNZ, which announced the possibility of raising the rate in the second half of 2022, given the good economic forecasts and the growth of export potential. The ANZ price index showed an increase of 1.3% for the eighth month in a row, while the business confidence index rose by 7 pips. The Chinese economy continues to support the NZD as the latest economic reports from China show an impressive growth in exports and imports, which, although not in line with the forecasts, are still the strongest in many years. In particular, imports in May increased by 51.1% and such growth has not been observed in China in ten years. New Zealand, which exports a significant part of its products to China, should be pleased with such indicators, which are beneficial for its economy, although this is slightly reflected on the NZD/USD rates. At the same time, being at the maximum levels in the fight against a strong dollar can already be considered a good achievement.
The US economy seems stronger than ever. According to the latest reports, the number of open vacancies in the labor market reached an absolute record in April - 9.286 million vacancies, which easily exceeded market expectations of 8.3 million. At the same time, the trade deficit narrowed amid export growth - to the highest level in 14 months.
Technical analysis tools were divided in their signals, as was the opinion of experts regarding the further development of the market situation. We believe that the past uptrend has the potential to recover. The support line is still pointing up, and the trend reversal seems unlikely to be. Therefore, our choice today are the deals to BUY, taking into account the Stochastic oscillator's signal. The entry points to the market can also be considered at the levels of 0.6942 and 0.7442.
