NZD/USD Analysis: Test Of Mid-Term Lows Sparks Buying Reversal Higher -

NZD/USD Analysis: Test Of Mid-Term Lows Sparks Buying Reversal Higher

Jul 31, 2024Jeremy ParkinsonFinance0

The NZD/USD hit a low of nearly 0.58580 on Monday touching values last seen in April, but has experienced a reversal higher since this depth and setting the tone for more speculation.

The NZD/USD currency pair has not provided bullish traders with much opportunity for smiles recently.

Lows on Monday extended the downwards losing streak for the currency pair as a depth of nearly 0.58580 was challenged.

The last time the NZD/USD had touched depths which technically represent mid-term support was in April of this year.

However, the buying sparked on Monday upon the lows being touched has created some upwards noise.

The NZD/USD is currently around the 0.59162 ratio as of this writing as typically fast price changes flourish.

Speculative action in the NZD/USD is far from done today. The U.S Federal Reserve will release its FOMC Statement later, and on Friday the U.S jobs numbers will come out. Also, it should be mentioned the Bank of Japan earlier today raised its borrowing rate to 0.25%. However, traders need to focus on the U.S Federal Reserve and coming rhetoric this evening.
NZD/USD and U.S Interest Rate OutlookThe ability of the NZD/USD to climb above the 0.59000 late yesterday and seeing the currency pair sustain values early this morning is a sign financial institutions likely believe the NZD/USD was oversold. The question now for large traders is what type of reaction will be demonstrated when the U.S Fed steps into the limelight and delivers its interest rates outlook. The Fed is largely expected to speak about the potential of a Federal Funds Rate cut in September, but what it mentions about the prospects for an other interest rate cut in November will be highly sought by financial institutions.New Zealand has faced tough economic conditions, but the RBNZ has already signaled that it will cut interest rates during their next monetary policy session. What financial institutions are clearly waiting on for now is confirmation the U.S Fed will follow suit in September. If this occurs the NZD/USD should stabilize and be able to maintain its price values above the 0.59000 level, but if the U.S central bank says it is also considering another rate cut later this year buying could be sparked in the currency pair which may be viewed as still being in oversold territory.
NZD/USD Price Velocity and Risk ManagementExperienced traders that like to gamble on the NZD/USD know price velocity is a frequent companion of the Forex pair. The move lower early this week has been part of bearish trend which had seen genuine momentum build since the middle of July. However, the move higher the past day and a half shows financial institutions still believe the 0.59000 level is where lower values for the currency pair need to be supported.

The question is what will happen if the U.S Fed signals two interest rates are coming over the mid-term.

Will the 0.60000 come into favor quickly if the Fed sounds abundantly dovish?

If the Fed remains cautious and talks only about one rate, choppy conditions in the NZD/USD will prevail.

NZD/USD Short Term Outlook:

Current Resistance: 0.59200

Current Support: 0.59030

High Target: 0.60110

Low Target: 0.58855

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