The New Zealand dollar had shown strong resilience against the US dollar, reclaiming its bullish momentum for three consecutive weeks. The pair started the new week with the bulls entirely in control and struggled to break its resistance at 0.65375, giving way to higher levels. Today, the Kiwi pair is holding firm and trading above this resistance during the Asian session. NZD/USD price is currently at the 0.6550 region.
What are the fundamental factors supporting the NZDUSD bullishness?
The recent bull trend of the New Zealand dollar has been supported by many factors such as:
US Bank Holiday
The US banks are currently embarking on a holiday today. The US stock market is closed because of the holiday. This means reduced volumes of transactions would be seen on the US dollar in the forex market today.
Other occurrences from the economic calendar
There is no significant economic activity to influence the New Zealand dollar this week apart from the influence of the US dollar. This gives the bulls more confidence in pushing for higher levels.
The dollar index has started the new week on a negative trend ranging at 101.3. Experts believe that the US dollar has exhausted its strength and dominance in the market. This means we can expect a reversal against the dollar for other pairs in the market.
Events to influence NZDUSD from the economic calendar today
The only data that pertains to the New Zealand dollar from the economic calendar is the figure from the 'building consent'. The building consent, also called 'building permits', measures the increase in the number of new building consents issued by the government. This data shows the rate of demand for housing in the country.
The previous reading for this data is 5.8%. A higher reading would be seen as positive and bullish news for the NZDUSD. A lower reading, therefore, would mean the opposite.
NZDUSD Forecast: Will the bullishness continue?
There is generally a mixed sentiment in the market regarding the NZDUSD. This is based on the comments from the Reserve Bank's new Chief Economist, Paul Conway, who foresees lower domestic inflation for NZD during the second half of 2022. Though he remained confident that New Zealand's central bank could guide the economy to a "soft landing" amidst raising the interest rates.
The bulls are expected to close above the monthly resistance at 0.65660 for the bullishness to continue. However, if they fail to achieve this, we might see some retracement to the next support at 0.64550.