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NZD/USD: trading in the global downwards channel

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  • NZD/USD: trading in the global downwards channel

    Current trend

    Amid a slowdown in the USD growth, the NZD/USD pair corrects, trading near the level of 0.7106. Yesterday, the New Zealand Ministry of Health announced a new outbreak of the Delta coronavirus strain. Like previously, 15 new cases have been identified in Auckland, accounting for 953 cases out of 970 in the country. The unstable epidemiological situation continues to put pressure on the country's economy, although the indicators are kept at acceptable levels, supporting the national currency.

    So, yesterday, the Bureau of Statistics reported a slight decrease in the inflation rate in food prices: the figure for August was 2.4% YoY instead of 2.8% for the previous period. The August rise in prices in this segment overtook the July growth by 0.3% MoM, thus marking the fifth month of growth in a row. The largest increase was observed for service in restaurants (+4.6%), for poultry and fish (+2.2%), as well as for fruits and vegetables (+2.1%).

    In the US House of Representatives, a party-wide debate continues over tax hikes for the rich to help cover the cost of Joe Biden's $3.5T economic bailout package approved in August. Contrary to expectations, the Democratic Party opposed a corporate tax hike to 28% and proposed an increase in duties to 26.5%. At such a rate, budget revenues will not be enough to cover the debt, leading to another default.

    Support and resistance

    The asset moves within the global downwards channel, approaching the resistance line. Technical indicators keep a global buy signal: fast EMAs on the Alligator indicator move above the signal line, and the AO oscillator histogram is in the buy zone.

    Resistance levels: 0.7160, 0.7303.

    Support levels: 0.7056, 0.6814.