The NZDUSD keeps on moving lower, in line with expectations, towards the March 2020 lows near the 0,547 level. The maximum that was enough for the growth wave at the beginning of this week was a bounce to the level of 0,58. Further the "bulls" fuse wore off, and by the current moment the quotes are fluctuating weakly in anticipation of important statistics from the U.S.
The labor market data coming out today is one of the two most important reports on the American economy (inflation report for September is expected next week on October 13). Despite the Fed's cumulative 3% key rate hike over the last six months, the labor market is hardly showing much of a slowdown. And until the pace of job creation and the unemployment rate return to pre-pandemic rates, the Fed will have no reason to change its tight monetary policy.
We'll see if today's report brings a new wave of growth in the dollar or if other currencies can finally catch their breath from their steady decline. Anyway, even a one-time worsening of the labor market situation is unlikely to be an obstacle for a new increase of the key rate at the Fed meeting on November 2. After all, there were earlier hopes that two months in a row of declining annual inflation would change the position of the U.S. regulator. The result is clear: the policy remains tight, the dollar index is at 20-year highs and the stock market is at a yearly low.
The Reserve Bank of New Zealand tried to help NZDUSD to rise slightly by increasing its key rate for the fifth time in a row by 0.5%, this time to 3.5%. The effect was short-lived: the decision was expected anyway, but the risky nature of the New Zealand currency leaves it no chance against the American dollar.
The target for the NZDUSD below is the March 2020 low around 0,547. It is possible to open a position at current prices or wait for another impulse of growth towards the level of 0,58.
The following trading strategy options can be suggested:
1) Sell NZDUSD at the current price. Take profit - 0,547. Stop loss - 0,575.
2) Sell NZDUSD as it rises to the level of 0,58. Take profit 1 - 0,56. Take profit 2 - 0,547. Stop loss - 0,59.
Traders may also use Trailing stop instead of a fixed Stop loss at their sole discretion.