NZDUSD trades 0.22% higher at 0.6611 making fresh six-month highs after reports that China and U.S. have reached a trade deal to cancel the new tariffs planned to impose on December 15. The USA also offered to reduce by 50% the existing tariffs on 360 billion Chinese products. Investors sentiment boosted also by the major election win by Conservatives giving them the power to deliver the much anticipated Brexit.
RBNZ the previous week reduced the New Zealand banks’ capital. The level of Tier-1 capital for the banks will be 16 per cent, while the transition period extended to seven years from five. The new capital rules will take effect in July 2020.
NZDUSD momentum is clearly bullish as the pair trades at six-month highs and above the major daily moving averages. On the upside bulls will now face the resistance at 0.6641 the high from July 28th. Long positions look safe as long as the pair trades above the 200-day moving average at 0.6534. A break above that level might question the next resistance at 0.6786 the high from July 21st.
A negative signal that bulls need to watch is that the RSI 14 in the daily chart have reached overbought levels at 75.85, so we can’t rule out some profit-taking.
On the other hand, immediate support for the pair stands at 0.6599 the daily low while the next support comes at 0.6573 the low from yesterday’s trading session. The 200-day moving average will provide extra support at 0.6534.