Predicting the movements of the New Zealand dollar pair in the coming period

Basic overview

The US dollar has been relatively stronger against most major currencies since Friday, as long-term inflation expectations in the University of Michigan final consumer confidence survey jumped to a new 30-year high.

Risk aversion sentiment rebounded after long-term inflation expectations rose, and markets fear that in the event of a slowdown, the Fed may not be fast enough to cut interest rates amid inflation remaining above target and uncomfortably high long-term inflation expectations.

On the other side of the New Zealand economy, the Reserve Bank of New Zealand cut interest rates by 50 basis points as expected last week, but Governor Orr sounded less pessimistic than expected as the central bank will now slow down the pace of easing as it approaches a neutral interest rate.

Technical overview

The New Zealand dollar retreated near the levels of 0.5710 on Tuesday, as the pair is trading inside an ascending wedge on the four-hour frame, the pair is trying to reach the lower limit of this wedge near the levels of 0.5700.

Which, if it breaks and closes below the candle for at least 4 hours, could open the way for a further decline towards the levels of 0.5610 and then 0.5540, under the influence of the negative divergence of the MACD indicator.

This scenario fails if the 0.5800 levels break higher.