In Monday’s European session, the NZD/USD pair ascended close to 0.5660. The Kiwi currency pair witnessed a sharp rally after the Chinese government declared initiatives to boost private consumption. According to Xinhua News Agency, the Chinese central government said it would provide financial aid to those grappling with living costs and promised further benefits for some unemployed individuals.
Going forward, market participants will zero in on China’s National Bureau of Statistics (NBS) Manufacturing and Non-Manufacturing Purchasing Managers’ Index (PMI) data for December, set to be released on Tuesday. Projections suggest that the Manufacturing PMI will steadily expand to 50.3, while non-manufacturing output will grow at a slightly quicker pace to 50.2. Given New Zealand’s close trading relationship with China, the New Zealand dollar (NZD) is highly sensitive to Chinese economic data.
However, the overall picture for the Kiwi dollar isn’t rosy. Investors are anticipating that the Reserve Bank of New Zealand (RBNZ) will slash its Official Cash Rate (OCR) by 50 basis points to 3.75% during the February policy meeting.
On a relatively quiet trading day ahead of New Year celebrations, the US dollar (USD) weakened. The US Dollar Index (DXY), which gauges the dollar’s value against six major currencies, dropped to around 107.85.
On a weekly scale, the NZD/USD has found some short-term support near the two-year low of 0.5520. The pair’s outlook remains bearish, as indicated by the 20-week Exponential Moving Average (EMA) hovering around 0.5900. The 14-week Relative Strength Index (RSI) has slid towards 30.00, pointing to a powerful bearish momentum.
Should the pair break below the psychological support of 0.5500, it could plunge towards the 13-year low of 0.5470 and the round-number support of 0.5400. Conversely, a conclusive break above the November 29 high of 0.5930 might propel the pair to the November 15 high of 0.5970 and the psychological resistance of 0.6000.
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