The uptrend formed in March seems to be coming to an end. On the chart, since July we have observed a consolidation of the rate in the range of 0.6510 - 0.6790 USD, although the support and resistance lines are still directed upwards.
As much as we would like to, the highs have been reached and there are many reasons why the New Zealand dollar may not be worth as much as it was in 2019, before the start of the pandemic. Of course, the coronavirus continues to put pressure on the global economy and the value of commodity currencies. Investors are not willing to take risks and prefer the US dollar as a safe asset. Investors will not take risks also due to the upcoming US elections. So the USD oddly gets support from that against risky assets.
The New Zealand dollar is under pressure not only because of the pandemic, but also due to comments from RBNZ officials about serious preparations for negative interest rates. In addition, reports on the Chinese economy, which showed a sharp drop in the trade surplus in September, due to a 13.2% increase in imports, also play a role here.
Next week is very important for NZD/USD quotes. The publication of data on China's GDP will certainly have an impact on the value of the New Zealand dollar, most likely a positive one. Also, reports on the New Zealand economy will be published, such as the trade balance and consumer price Index in the third quarter. Given the latest report on business activity, which showed a steady increase to 54 pips, there is every reason to expect other good reports for the same period. However, the pandemic will not allow the NZD to strengthen much. Based on this, we believe that in the short term, the deals to BUY will be effective, but in the medium term, the deals to SELL seem more profitable. The entry points are also the 0.6510 and 0.6790 levels. The probability of achieving the latter, at the moment, remains higher.
