NZD/USD Still Vulnerable Around 0.60 Despite the Q2 GDP Expansion
NZD/USD remains bearish and is challenging the 0.60 support zone, despite the increase in the Q2 GDP in New Zealand
The Kiwi has turned quite bearish this year, declining around 10 cents from 0.70 to 0.60 during this bearish trend. There have been retraces higher but eventually, they have failed and the highs continue to get lower. Earlier this week buyers were having a go, but the 20 SMSA (gray) stopped the climb and the price reversed lower, tumbling more than 100 pips lower after the US CPI inflation continued to grow in August, which increased the odds of more strong rate hikes from the FED.
The Reserve Bank of New Zealand (RBNZ) has also been raising interest rates, having been the first to start doing so last year, but the Kiwi hasn’t taken advantage of that wither, which points to further declines.
NZD/USD Daily Chart – The 20 SMA Rejected the Price
The 0.60 level is under attack
The 0.60 level is under attackOn the downside, the low from last week reached 0.59956 just below the natural support at 0.60000. That level represents the lowest level going back to May 2020. Looking at the weekly chart below a move below the 0.6000 area and staying below would have traders targeting the April and May 2020 lows that come between 0.59089 and 0.5921. That level is also near a downward sloping trendline.
Today’s GDP report from New Zealand showed an expansion in economic activity during Q2, after a 0.2% contraction in Q1. Expectations were for a 1.0% increase in the GDP, but the economy expanded by 1.7% instead, which should have helped the NZD, but the Kiwi didn’t benefit which is another bearish signal. If something can’t go up on good news, it will eventually go down. We are following this pair for another retrace higher so we can open a sell forex signal here.
New Zealand Q2 GDP Report
- Q2 GDP increased by +1.7% QoQ vs 1.0% expected
- Q1 GDP was -0.2%, unchanged
- GDP YoY came at 0.4% vs 0.2% expected
- Previous GDP YoY was 1.2%
NZD/USD Live Chart
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