NZD/USD Bearish Trend to Persist Ahead of US GDP Data
The NZD/USD price dropped to the lowest level since mid-July ahead of the upcoming New Zealand retail sales and US GDP data. It was trading at 0.6200 on Wednesday, which was lower than this month’s high of 0.6467.
New Zealand retail sales and US GDP
The NZD to USD exchange rate came under intense pressure in the past few weeks as the US dollar regained its strength. As I wrote on Tuesday, the US dollar index surged to $109.30, which was the highest point in July. It has also formed a cup and handle pattern, signaling that it will continue rising.
The next key catalyst for the NZD/USD price will be the upcoming New Zealand retail sales that will come out on Thursday morning. Analysts expect the data to show that sales rose from -0.5% in the first quarter to 1.7% in Q2.
The numbers will come about two weeks after the Reserve Bank of New Zealand (RBNZ) decided to hike interest rates by 50 basis points. The bank believes that higher interest rates are necessary to curtail the soaring inflation.
The NZD/USD price will also react to the second estimate of US economic data for the second quarter. Based on the first estimate, analysts expect the data to show that the economy contracted by 0.8% in Q2 after falling by 0.9% in Q1. As such, the US moved to a technical recession, which happens when the economy contracts in two straight quarters.
The other big catalyst for the pair will be the upcoming statement by Jerome Powell at the Jackson Hole Symposium in Wyoming. In it, he will likely provide his first guidance after this month’s inflation data.
NZD/USD forecast
The four-hour chart shows that the NZD/USD price made a strong bearish breakout below the lower side of the ascending channel pattern. It has managed to move below the 25-day and 50-day moving average while the Relative Strength Index (RSI) moved slightly below the neutral point.
Therefore, the NZD to USD exchange rate will likely keep falling as sellers target the next key support level at 0.6100.
