NZDUSD Tests Critical Resistance on Business Survey; RBNZ Rate Decision Due This Week

NZDUSD is unchanged from its opening price at 0.6144 despite the ANZ Business Outlook Survey showing an improvement in sentiment. With the currency pair is trading at a critical resistance level, will the RBNZ rate statement push it higher or lower?

Earlier, the ANZ Preliminary Business Outlook Survey for May showed an improvement to -45.6 from -66.6 in April. The report revealed an overall jump in business confidence with only 42% of respondents seeing weaker activity for their businesses in 2020. In April, this percentage was higher at 55.0%.

Later this week, on Wednesday, the RBNZ is expected to sit on the sidelines and keep its interest rates steady at 0.25%. However, some analysts think that the central bank would hint that it plans to double its QE program soon. Should this be the case, we could see NZDUSD fall similar to how GBPUSD dropped after BOE Governor Bailey announced that the BOE could increase its liquidity in June. On the contrary, if the RBNZ echoes Prime Minister’s Ardern’s optimism, NZDUSD could rally.

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NZDUSD Outlook

On the daily time frame, it can be seen that NZDUSD is testing resistance at the falling trendline (from connecting the highs of December 31 and March 9). Reversal candlesticks around its current price, at 0.6150, could mean that the currency pair is headed lower.

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The 4-hour chart gives us a clue that NZDUSD could find support around 0.6045 and test the rising trendline (from connecting the lows of April 23 and May 7). 

However, a strong bullish close above the high of April 30 at 0.6175 would invalidate this bearish assumption. It could instead mean that there are still enough buyers in the market. Should this happen, it may not take long for NZDUSD to rally to 0.6340 where it may test the 200 SMA and 100 SMA as well as its March 6 highs.More content