Nzdusd To Target Level Despite Solid Us Data

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Nzdusd To Target Level Despite Solid Us Data

NZD/USD To Target 0.6230 Level Despite Solid US Data

During Tuesday's session, the NZD/USD pair was trading higher even though the data coming out of the USA was pretty solid. The key reason behind this price action of the NZD/USD is the Fed's meeting due in a few days.

On the other hand, the NZD is gaining strength after China announced a stimulus package to support the economy. This move by China will improve local demand, which will help China's trading partners, such as New Zealand as well.

On the US side, the recent housing & consumer confidence index for July was pretty good. The index's value rose to 117 which was higher than the previous value of 109.7 and the expectations of 112. On the contrary, the S&P-based home price index was down during May with a value of 1.7% only against an expectation of -2.2%.

25 BPS Rate Hike Is Highly Likely

The Fed's meeting is almost upon us, and the market is pricing in a 25 bps rate hike. The Fed's chair Powell is following a data-dependent approach & thus will only base a decision after looking at the actual facts. For now, the US economy is robust, and the labour market conditions are tight.

Based on the current economic situation in the USA, a rate hike in the September meeting is also highly likely. If this happens, the US Dollar will gain strength once again.

In the meantime, the dollar index was last seen near 101.60 only to retreat lower to 101.40. At the same time, the 2-year rate for the US bonds also decreased and was seen near 4.90%.

For the most part, the NZD/USD outlook is biased toward the downside despite the 2-day bullish rally. For starters, the RSI on the 1-day chart is just below the midline, which is a sign of bearish pressure.

Looking ahead, the important resistance levels to watch in NZD/USD are 0.6230 and then 0.6250 followed by 0.6270. On the contrary, the NZD/USD's support levels are located at 0.6200 and then 0.6190. After that, the next stop for the NZD/USD bears will be the 0.6150 level.

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