The NZD/USD pair rose to the highest level since November 24th after the positive New Zealand trade numbers. It is trading at 0.6900, which is about 5.60% above the lowest level this year.
New Zealand’s economic recovery
The NZD/USD pair has been in a strong bullish trend in the past few days even after the relatively hawkish Federal Reserve. The bank decided to hike interest rates by about 0.25% in its first hike since 2018.
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The pair has risen because of the strong recovery of the New Zealand economy as commodity prices rise. For example, the price of dairy and other cattle products has been rising rapidly in the past few weeks as input costs rise.
According to the New Zealand Bureau of Statistics, exports rose sharply in February while imports retreated. Exports rose from N$4.80 billion to over N$5.49 billion in February. At the same time, imports retreated from N$5.92 billion to about N$5.88 billion. As a result, the country’s trade deficit narrowed from over N$1.12 billion to about N$385 million.
Other economic numbers from New Zealand have been a bit strong also. For example, the unemployment rate has dropped to the lowest level even before the pandemic started. Inflation has also held steady because of the rising commodity prices.
As a result, the Reserve Bank of New Zealand (RBNZ) jas become one of the most hawkish banks having ended its quantitative easing program and hiked interest rates three times. Analysts expect that it will deliver more hikes this year as it becomes more aggressive in its attempt to fight inflation.
According to the RBNZ, rates are expected to rise to about 2.5% in the next 12 months and then to 3.25% at the end of 2023.
NZD/USD forecast
The daily chart shows that the NZD/USD pair has been in a strong bullish trend in the past few days. As a result, the pair has managed to move above the 25-day and 50-day moving averages, meaning that bulls are in control.
The pair has also formed an inverted head and shoulders pattern while the Relative Strength Index (RSI) has been in an upward trend. Therefore, there is a likelihood that the New Zealand dollar will maintain its bullish trend in the near term.
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Source: https://invezz.com/news/2022/03/21/nzd-usd-forecast-as-it-forms-an-inverted-head-and-shoulders-pattern/