Is the NZDUSD bearish or bullish?

The Reserve Bank of New Zealand (RBNZ), showing concern about inflation, made another 50bsp hike during May taking its Official Cash Rate to 2.0%. The hawkish tone and actions of the RBNZ paired with  fears the US economy could tip into a recession by the end of the year have helped the NZD regain some  composure over the past couple of weeks.  

The NZDUSD made a significant bounce at around 0.62000 after its descent during the first few weeks of  the month. Now, the NZD is showing some sign of weakness as it again attempts to breach the 0.63100  resistance level. 

During last week, we saw mixed data for the Kiwi dollar. The Business NZ Services Index showed a  significant increase of 55.2 versus the previous data of 52.2, which indicates a stronger expansion in the  services area. But on the other hand, Westpac Consumer Sentiment recorded the lowest reading ever of  78.7 since the survey began in 1988 which shows pessimism towards economic growth and low  consumer confidence.

NZDUSD 1D 

On the daily chart, the Williams Alligator Indicator is showing a strong downtrend signal as the price  stays below the green 5-period moving average (alligator’s lips). While the other moving averages, the  red 8-period moving average (alligator’s teeth) and the blue 13-period moving average (alligator’s jaw)  are separated by a large distance giving us another strong bearish trend signal. 

However, a staunch support level might appear at the 0.62100 area. Given the fundamental analysis and  a strong downtrend signal from the alligator indicator, a possible break out to the downside below the  strong support zone may push the pair to the 0.60000 psychological price area.  

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