NZD/USD Analysis: Kiwi Looks Stronger than the USD

LVR restrictions are one of the RBNZ’s tools designed to reduce the risk associated with ‘boom-bust’ cycles, which helps to meet their statutory purpose of ‘promoting the maintenance of a sound and efficient financial system’. LVR restrictions set a ceiling on the percentage of new mortgage lending that banks can offer at high LVRs.

New Zealand Central Bank’s rate cuts and other measures and tools have reacted positively on NZD during the pandemic as since April 2020, Kiwi against the US Dollar was able to rise by 13.74%.

The situation around the US Dollar remains mixed, the recent report on a 25% drop of new Covid-19 cases looks positive, although the pause on the stimulus bill resulted in a -0.42% drop of the US Dollar index. The negative impact on the USD may be also caused by tensions rising on the South China Sea, the US Carrier was reported to sail near the Chinese-controlled area in the disputed waters.

NZD/USD looks bullish, as the pair broke out from the triangle and is still above the long-term dynamic resistance.

The 4Hour chart of the pair is signalling the bullish continuation of the pair amid the breakout from the triangle pattern, however there are still several resistances to tide over.

As RSI nears the top barrier, there is a high chance that the pair will correct slightly before the continuation of another bullish impulse. Nearest support levels are $0.72200 – $0.72130, if Kiwi remains above these levels, another impulse will take the pair higher towards $0.73000 and 0.73900.

An hourly NZD/USD chart suggests to watch for the breakout from another short-term resistance at $0.72570 and also confirms the bullish sentiment of the pair as it follows the higher high and higher low bullish principle.

All three time frames have support of 100 and 200 MAs and EMA50. Today’s JOLTs Job Openings data and tomorrow’s Core CPI and CPI data from the US will play a significant role in identifying the short-term trend direction of the pair, while Thursday’s Initial Jobless Claims and the FED Monetary Policy report will impact the mid-term trend direction.