NZDUSD turns lower after strong retail sales; but weekly chart shows upward trend intact

NZDUSD
NZDUSD

The NZD/USD pair declined slightly even after the country’s statistics office released upbeat economic numbers. The pair is trading at 0.6552 at 06:00 GMT, and is down from yesterday’s high of 0.6600.

New Zealand retail sales soar

New Zealanders went out shopping more in June after the country continued to encourage careful movements. According to the statistics office, electronic card sales jumped by 16% in June after rising by 78.9% in May. The increase in May was expected considering that the country was in lockdown in April. The sales rose by 8.0% on an annualised basis after falling by 6.0% in the previous month.

The bureau attributed the jump to sales in nondurable goods such as household goods and furniture. Sales in supermarkets and liquor stores also rose. The only laggards in the tracked retail sectors were fuels and hospitality. These numbers came a few days after the department released upbeat housing consent numbers.

The New Zealand economy has been doing well for two reasons. First, it was the first major economy to declare victory over the coronavirus. It has since then restarted major activities, including sports. Second, New Zealand is mostly an agriculture-based economy. And as such, demand for these items continue even in the midst of a pandemic. All these has helped push the NZDUSD pair up by 8% in the past few months.

However, a key challenge is that the number of people losing their jobs is rising. According to Herald New Zealand, the number of people applying for unemployment benefits is nearing those reported during the Global Financial Crisis.

NZDUSD technical outlook

The weekly chart shows that the NZDUSD pair is down slightly and is trading at 0.6555. This price is above the 50-day and 100-day exponential moving averages. It is also above the 50% Fibonacci retracement level. This retracement has been drawn by connecting the highest point on February 2018 and the lowest point this year. This means that the price is likely to continue rising as bulls target the next resistance level at 0.6690.

On the flip side, a move below the 50% retracement at 0.6458 will invalidate this trend.  

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NZDUSD technical forecast

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