NZD/USD: sharp exchange rate fluctuations
Current trend
As expected, reports of an escalation of the military conflict on the borders of Ukraine were met with a wide sale of risky assets and an increase in the price of the US dollar, gold, and oil, but on Friday, part of the losses by the NZD/USD pair was compensated. Last week, the asset tested the level of 0.6800, after which it dropped sharply to 0.6650, but by the close of trading, the "bulls" managed to raise the price to 0.6740.
The main reason for the sharp movement of the exchange rate is geopolitics. Instead of a local invasion of eastern Ukraine, initiated with demilitarization and denazification, Russian troops moved inland, which led to the introduction of unprecedented sanctions against the Russian Federation, including the blocking of central bank assets in the US and Europe. The markets could not ignore such events: commodities rose in price at the moment but then corrected. Traditionally, the shelter assets, the US dollar, and gold have significantly strengthened. Futures on the USD Index rose from 96.250 to 97.700 on Thursday but closed at 96.500 on Friday.
Earlier, in a statement, the Reserve Bank of New Zealand (RBNZ) noted that direct economic ties with Ukraine and Russia are insignificant, and the key consequences of the military conflict will be a tightening of global financial conditions (for example, a fall in stock markets), as well as an increase in inflation. Pressure due to higher oil prices. The latter is of particular concern to members of the regulator due to the risks that medium-term inflation expectations could exceed the 2.0% target. RBNZ Governor Adrian Orr will deliver a report today on "Fighting Inflation During a Pandemic," where he will announce the regulator's plans to raise interest rates and stabilize the national economy.
Support and resistance
The long-term trend in the NZD/USD pair is downwards. After an unsuccessful attempt to break through the resistance level of 0.6800, the price fell to the area of 0.6650. Now, it tries to consolidate above the support level of 0.6700, which allows renewal of the last week's high, and a breakdown allows a fall to the 0.6630 area.
The medium-term trend remains upwards. Key support 0.6669–0.6655 was tested last week. The zone was held, suggesting further growth towards Target zone 2 (0.6823–0.6809).
Resistance levels: 0.6800, 0.6880.
Support levels: 0.6700, 0.6650, 0.6540.
As expected, reports of an escalation of the military conflict on the borders of Ukraine were met with a wide sale of risky assets and an increase in the price of the US dollar, gold, and oil, but on Friday, part of the losses by the NZD/USD pair was compensated. Last week, the asset tested the level of 0.6800, after which it dropped sharply to 0.6650, but by the close of trading, the "bulls" managed to raise the price to 0.6740.
The main reason for the sharp movement of the exchange rate is geopolitics. Instead of a local invasion of eastern Ukraine, initiated with demilitarization and denazification, Russian troops moved inland, which led to the introduction of unprecedented sanctions against the Russian Federation, including the blocking of central bank assets in the US and Europe. The markets could not ignore such events: commodities rose in price at the moment but then corrected. Traditionally, the shelter assets, the US dollar, and gold have significantly strengthened. Futures on the USD Index rose from 96.250 to 97.700 on Thursday but closed at 96.500 on Friday.
Earlier, in a statement, the Reserve Bank of New Zealand (RBNZ) noted that direct economic ties with Ukraine and Russia are insignificant, and the key consequences of the military conflict will be a tightening of global financial conditions (for example, a fall in stock markets), as well as an increase in inflation. Pressure due to higher oil prices. The latter is of particular concern to members of the regulator due to the risks that medium-term inflation expectations could exceed the 2.0% target. RBNZ Governor Adrian Orr will deliver a report today on "Fighting Inflation During a Pandemic," where he will announce the regulator's plans to raise interest rates and stabilize the national economy.
Support and resistance
The long-term trend in the NZD/USD pair is downwards. After an unsuccessful attempt to break through the resistance level of 0.6800, the price fell to the area of 0.6650. Now, it tries to consolidate above the support level of 0.6700, which allows renewal of the last week's high, and a breakdown allows a fall to the 0.6630 area.
The medium-term trend remains upwards. Key support 0.6669–0.6655 was tested last week. The zone was held, suggesting further growth towards Target zone 2 (0.6823–0.6809).
Resistance levels: 0.6800, 0.6880.
Support levels: 0.6700, 0.6650, 0.6540.
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