We present a medium-term investment review of the NZD/USD pair.

The medium-term “bullish” scenario is becoming relevant again, as the New Zealand dollar looks more stable than the American dollar.

In mid-August, the Reserve Bank of New Zealand (RBNZ) decided to start a cycle of monetary policy easing, cutting the interest rate by 25 basis points to 5.25% in response to the inflation slowdown. In the second quarter, it remained at 3.3%. The indicator stays above the target range of 1.0–3.0%, maintaining pressure on the country’s economy. However, the regulator officials assume that in the next period, the consumer price index may reach 2.2%. In addition, the August electronic cards retail sales increased from –0.1% to 0.2%, while the Q2 gross domestic product (GDP) in the second quarter decreased from 0.1% to –0.2%, better than the forecast of –0.4%, becoming the key reason for the borrowing cost cut. The RBNZ next meeting is due on October 9. If the Bank adjusts the indicator to 5.00%, the country’s economy will receive sufficient impetus for recovery.

The dynamics of the American currency, despite the local slowdown, will most likely develop in a moderate downward or sideways trend due to the expected change in the US Fed interest rate. According to the Chicago Mercantile Exchange (CME) FedWatch Instrument, the probability of a 25 basis point reduction at the November 7 meeting is 60.7%. For the December 18 meeting, it reaches 49.6%. The possibility of a –75 basis point adjustment is 19.0%, which may negatively affect the dollar. On the other hand, a smooth easing of monetary policy by –25 basis points will support the American currency, at least keeping it at the current levels.

Considering all these factors, the NZD/USD pair strengthening is quite likely.

In addition to fundamental factors, the technical indicators confirm further growth. On the weekly chart, the price is moving away from the resistance line of the downward channel with dynamic boundaries of 0.6100–0.5450, heading towards 0.6370.

The ascending wave has consolidated above the core correction of 38.2% Fibonacci 0.6260, supporting the positive dynamics.

Let us assess the key levels on the daily chart.

The quotes are strengthening above the resistance line of the sideways channel 0.6270–0.5850. After a reverse test, growth to the Fibonacci intermediate correction of 50.0% at 0.6490 may follow. In case of a decline to the low of September 12 at 0.6120, the ascending scenario will be canceled, and it is better to liquidate long positions. Around ​​the Fibonacci full correction of 61.8% at 0.6720, there is the target zone, after reaching which it is better to fix profits on open long positions.

In more detail, let us asses the entry levels on the four-hour chart.

A signal to enter into a buy trade will be received after breaking through last week’s high of 0.6370, which may happen soon.

Considering the average daily volatility of the trading instrument over the last month of 56.2 points, the movement to the target zone of 0.6720 may take 49 trading sessions. However, if the indicator increases, this time will be reduced to 38 trading sessions.