NZD/USD advances after the aggressive stance of the RBA, and the Dollar falls

• The NZD/USD advances supported by the aggressive line of the RBA and the weakness of the Dollar during the US festive session.
• Uncertain economic prospects in the US, amid mixed economic data and recession fears, increase the likelihood of rate hikes.
• New Zealand QSBO improves in Q2.

He NZD/USD advances in a muted North American session as United States (US) traders remain on vacation for the Independence Day celebration. However the NZD/USD it was boosted by the hawkish line of the Reserve Bank of Australia (RBA) and the dovish tone of the dollar. The NZD/USD pair is trading at 0.6197 after hitting a daily low of 0.6140, up 0.75%.

NZD/USD benefits from hawkish RBA line, eye on US data and RBNZ decision next week

Global stocks are trading higher on tight liquidity as US spot markets remain closed. The latest round of US economic data has painted an uncertain economic picture after durable goods orders, retail sales and the final first-quarter Gross Domestic Product (GDP) reading justified the need for the Federal Reserve (Fed) to raise rates. However, a weak reading on the Fed’s preferred inflation gauge released on Friday, coupled with a contraction in the June ISM manufacturing PMI, raised the odds of a hard landing as recession fears mounted.

Meanwhile, during the Asian session, the New Zealand Institute for Economic Research (NZIER) quarterly business opinion survey improved in the second quarter to -63.0% from -66.0 previously. The report highlighted that demand is weakening, while capacity utilization declined among builders and manufacturers. Regarding employment, companies revealed difficulties in finding labor, especially unskilled.

This, coupled with the Reserve Bank of Australia’s (RBA) June monetary policy decision to keep rates unchanged but hawkish, opened the door for further tightening, and underpinned the New Zealand dollar (NZD). against the US dollar (USD).

The Dollar Index (DXY), which measures the value of the dollar against a basket of currencies, has lost some of Monday’s gains and is down 0.02% to 102,941 points. In the short end of the curve, US Treasury yields are rising, while 20- and 30-year yields are trading minuscule losses.

Upcoming events

The New Zealand economic calendar is light during the week. Still, there will be some traction until next week’s Reserve Bank of New Zealand (RBNZ) monetary policy decision, which is expected to keep rates unchanged. In the US, NZD/USD traders will receive signals from the latest FOMC minutes, Fed spokesmen and labor market data.

NZD/USD Price Analysis: Technical Insights

In the short term, the NZD/USD pair remains neutral to the downside as the 200 day EMA at 0.6225 is holding back the pair’s advance. Furthermore, a three-soldiers advancing chart pattern suggests that buyers mustered strong momentum, bolstered by the RSI reaching bullish territory. If the NZD/USD breaks above the 200 day EMA, the June 16 high at 0.6247 will be exposed, followed by the 0.6300 figure. Conversely, if the NZD/USD falls below 0.6200, it could open the door for further declines, with an eye on the 100 day EMA at 0.6187 and the 50 day EMA at 0.6165.