Current trend

Against an unstable American currency, the NZD/USD pair is developing a moderate upward trend, trading at 0.6366.

Investors are assessing the New Zealand macroeconomic statistics. The September composite PMI in leading sectors increased for the fourth time in a row, changing from 37.1% to 45.3%, the high since spring 2014, which reflects analysts’ high confidence in the economic recovery. At the same time, the index of confidence in business circles of the Australian and New Zealand Banking Group increased from 51.0 points to 61.0 points, the business activity indicator – from –23.0 points to –19.0 points and the indicator of inflation expectations remained at 2.9%.

The American dollar, which remains the main driver of the asset’s movement, is trading neutrally at 100.10 in USDX. The currency cannot retreat from its year’s lows amid poor macroeconomic statistics. Thus, the August core price index of personal consumption expenditures, excluding food and fuel, changed from 0.2% to 0.1% MoM, which led to an acceleration from 2.6% to 2.7% YoY. This indicator is similar to the consumer inflation indicator, and its slight increase can be considered a negative signal, reinforced by the reduction in interest rates by the US Fed and expectations of a reduction in borrowing costs by at least another 50 basis points by the end of the year.

Support and resistance

The trading instrument is correcting, trying to consolidate above the resistance line of the sideways channel 0.6250–0.5880. Technical indicators maintain a buy signal: fast EMAs on the Alligator indicator are moving away from the signal line, and the AO histogram is forming ascending bars above the transition level.

Resistance levels: 0.6390, 0.6490.

Support levels: 0.6340, 0.6210.

Trading tips

Long positions may be opened after the price rises and consolidates above 0.6390, with the target at 0.6490. Stop loss is 0.6350. Implementation period: 7 days or more.

Short positions may be opened after the price falls and consolidates below 0.6340, with the target at 0.6210. Stop loss is 0.6380.