The economy of New Zealand depends on the price of milk. The Global Dairy Trade Price Index released by Global Dairy Trade has been showing a downtrend since early March.
New Zealand’s inflation for the first quarter decreased to +1,5% (YoY) compared to the +1,9% in the previous year. The consumer price index (QoQ) was released at +0,1% instead of +0,3%. The slowing of the inflation was caused by the situation with the petrol prices (down 7%) and international affairs (down 12%).
On the other hand, the US economy is still demonstrating signs of growth.
This is why it is quite understandable why the NZD is weakening against the USD. Now we are going to analyze the situation from the technical side.
On 1D TF the pair tested the local minimum at 0,65817 and started bouncing back. There was a slight divergence with the MACD indicator, which warns the bears about a possibility of reversal. The NZD/USD pair broke the 23,6% Fibo correction level (0,66646). We can see on the chart that theWilliams %R is also returning from the oversold zone.
Summary: we think that it would be better for conservative traders to wait until the pair breaks the 0,6700 level and open long positions. Also if you intend to hold long positions till the end of the week we strongly recommend that you pay attention to the NFP data release on Friday due to high volatility.