- NZD/USD strengthens on US dollar weakness and China's stimulus announcement to revitalize the real estate sector.
- Market speculation about the Fed's interest rate reduction starting in September has weakened.
- NZD/USD is approaching the crucial resistance of 0.6220.
The pair NZD/USD refreshes 10-week high at 0.6165 in the European session on Tuesday. NZD/USD is strengthened by multiple tailwinds, such as the weakness of the US dollar and China's announcement of new stimulus measures to boost demand in its troubled real estate sector.
The US Dollar Index (DXY), which tracks the value of the US dollar against six major currencies, has extended its decline to 104.50. The US dollar fails to capitalize on diminished expectations that the Federal Reserve (Fed) will begin reducing interest rates starting with the September meeting. The decline in market speculation about Fed rate cuts in September is the result of a strong U.S. economic outlook and policymakers' hawkish stance on interest rates.
Meanwhile, the New Zealand dollar strengthened after Shanghai in China announced several measures to revitalize the ailing real estate sector. The administration recognizes that reducing down payment requirements, lowering minimum mortgage rates and easing restrictions on home purchases will improve the situation. Being a proxy for the Chinese economy, the attractiveness of the New Zealand Dollar improves.
Investors are awaiting the release of New Zealand's budget, which will outline the scale of spending, borrowing and revenue collection by the government.
NZD/USD is approaching horizontal resistance drawn from the February 22 high around 0.6220. NZD/USD strengthened after a bullish crossover of the 20-day and 50-day EMAs around 0.6020, suggesting that an uptrend has been triggered.
The 14-period RSI is comfortably trading in the bullish range of 60.00-80.00, indicating that momentum has shifted to the upside.
An upward move above the round resistance level of 0.6200 will take the asset to the January 15 high near 0.6250, followed by the January 12 high near 0.6280.
On the contrary, a new decline would appear if NZD/USD breaks below the April 4 high around 0.6050. This would drag the pair towards the psychological support of 0.6000 and the April 25 high at 0.5969.
NZD/USD Daily Chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
