General analysis NZDUSD for 04.07.2022

Current dynamics

The NZD/USD pair started the week positively. To continue the positive performance that ended last week’s trading session, after it fell to its lowest level in two years in the first half of Friday’s trading session.

The pair fell to its lowest level in two years as the risks of a recession intensified on Friday. A wave of risk aversion took clues from the downbeat US PMI, as well as fears of an economic recession. However, it appears that the cessation of optimistic bets on the Fed's next move may be the reason for the recent rebound in the pair in addition to the US holiday today.

Speaking of data, the US manufacturing PMI for June fell to its lowest level in two years, to 53.0 vs. 54.9 expected and 56.1 previously. Details indicate that the employment index fell to 47.3 from 49.6 and the new orders index fell to 49.2 from 55.1. Finally, the Price Paid Index dropped to 78.5 from 82.2, against market expectations of 81.0 It should be noted that the final readings of the S&P Global Manufacturing PMI for June fell to the lowest level since July 2020, to 52.7 versus the flash estimate of 52.4 and 57 in May.

After the data, ANZ Bank said data cleared from both the US ISM and PMIs indicated faltering demand growth, lower business backlogs, and lower production over the summer. It is difficult to escape growing pessimism about growth, which is also fueling expectations of a peak in both inflation and central bank hawks.

Given the significant events for the pair this week, the light schedule and the US holiday may constrain the pair ahead of the FOMC meeting minutes and US jobs report for June.

Support and resistance levels

On the 4-hour chart, the tool is testing a consolidation above the Bollinger Bands moving average. The indicator is directed downward and the price range is narrowing, indicating that the current trend is about to change, and the momentum chart is below the 100 level, which gives buy signals. The Envelopes indicator gives sell signals.

• Support levels: 0.61850, 0.61500, 0.61150.
• Resistance levels: 0.62125, 0.62450, 0.62900, 0.63500.

Trading scenarios

• Long positions should be opened at the 0.62125 with a target of 0.62450 and a stop loss at 0.61850. Implementation period: 1-2 days.
• Short positions can be opened at the level of 0.61850 with a target of 0.61500 and a stop-loss at the level of 0.62125. Implementation period: 1-2 days.