NZD – The New Zealand dollar is showing a double-top pattern, brewing downward pressure

The New Zealand dollar initially rose against the U.S. dollar on Monday before falling back, despite stronger-than-expected New Zealand consumption data failing to provide substantial support. New Zealand's fourth-quarter retail sales rose 0.9% quarter-on-quarter, exceeding the market consensus expectation of 0.6%, but falling short of the 1.9% increase recorded in the previous quarter. Excluding automobiles, retail sales rose 1.5% year-on-year, up from 1.2% previously, confirming the resilience of domestic demand, particularly in discretionary spending. The Bank of New Zealand, as expected, kept the official cash rate unchanged at 2.25% last week, indicating that monetary policy would remain accommodative as inflation is expected to return to the midpoint of the target range over the next year. The market only anticipates limited tightening by the end of the year, thus providing limited support for the New Zealand dollar in terms of interest rates.

The NZD/USD pair, as seen on the technical chart, has been gradually declining after encountering resistance at the 0.61 level at the end of last month. It has now formed a double-top pattern, with the two tops being the high of January 29th at 0.6094 and the high of February 12th at 0.6077. Furthermore, the RSI and Stochastic Oscillator are declining, and the 4-day moving average has crossed below the 9-day moving average, indicating that the NZD/USD pair may have further downside potential. Current support levels are initially seen at 0.5930 and the 200-day moving average at 0.5870, followed by 0.58 and 0.57, with a further reference point at 0.5610. Resistance is expected at 0.6080, with the high of July 1st last year at 0.6122 being a larger target, further down to 0.62 and even the 0.64 level.

Forecast range:
Resistance: 0.6080 - 0.6122 – 0.6200 – 0.6400
Support: 0.5930 - 0.5870 – 0.5800 - 0.5700 - 0.5610

This Week's News Highlights:

23/2 New Zealand's Q4 retail sales rose 0.9% quarter-on-quarter.

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