Investments in the New Zealand dollar was not the best solution: since the beginning of the year, the NZD has fallen by 23.6% against the dollar, due to the difficult geopolitical situation and the recession of the world economy. The US interest rate rally left no chance: since February, investors have been trying to avoid risky commodity assets such as NZD and prefer safe, high-profitable American currency.
The situation changed in October due to the weakening of the USD, after the appearance of signs of completion of the growth of the rate. This allowed the New Zealand dollar to rise in price by 14%. Of course, we can say that the price minimum has been reached and the New Zealand dollar will not be worth less than 0.556 in the foreseeable future. At the same time, we have been fixing the rates in the overbought zone for a long time, which means that in the near future, there is a high probability of a price correction.
Today we can see that the rates are at the local maximum. A similar price was reached only once in August. This further strengthens our assumptions about the correction. The Stochastic oscillator is already showing the beginning of the downward movement.
This week, the New Zealand dollar received support on reports from China about the government's plans to ease the quarantine regime amid protests and cancel daily PCR testing, but this will not be enough for further growth against the USD, which receives a lot of support due to strong macroeconomic reports, and the issue of rate increases remains open. Of course, there will be fewer rate hikes in the future, nevertheless they will, and they will strengthen the USD. In the current situation, we consider the most promising deals to SELL in anticipation of at least a price correction or the restoration of the previous downtrend.
