NZD/USD Rebounds Ahead of 2023 Low with RBNZ Expected to Cut
New Zealand Dollar Outlook: NZD/USD
NZD/USD bounces back ahead of the 2023 low (0.5774) to keep the Relative Strength Index (RSI) above 30, but the Reserve Bank of New Zealand (RBNZ) rate decision may drag on the exchange rate as the central bank is expected to deliver a 50bp rate-cut.
NZD/USD Rebounds Ahead of 2023 Low with RBNZ Expected to Cut
NZD/USD no longer carves a series of lower highs and lows as it recovers from a fresh yearly low (0.5817), and the RSI may show the bearish momentum abating as it moves away from oversold territory.
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
New Zealand Economic Calendar
In turn, NZD/USD may attempt to further retrace the decline from the monthly high (0.6038) as it halts a three-day selloff, but the RBNZ meeting may undermine the rebound in the exchange rate as the central bank is anticipated to lower the official cash rate (OCR) to 4.25% from 4.75%.
Source: RBNZ
At the same time, the RBNZ may prepare households and businesses for lower interest rates in 2025 as ‘economic activity in New Zealand is subdued, in part due to restrictive monetary policy,’ and Governor Adrian Orr and Co. may project a lower trajectory for the OCR as the central bank is scheduled to update its quarterly Monetary Policy Statement (MPS).
With that said, a 50bp RBNZ rate-cut along with a dovish forward guidance may produce headwinds for the New Zealand Dollar, but NZD/USD may stage a larger recovery should the central bank show a greater willingness to unwind its restrictive policy at a slower pace.
NZD/USD Price Chart – Daily
Chart Prepared by David Song, Strategist; NZD/USD on TradingView
- NZD/USD clears the recent series of lower highs and lows to hold above the 2023 low (0.5774) with a move back above the 0.5910 (61.8% Fibonacci extension) to 0.5960 (23.6% Fibonacci retracement) region raising the scope for a move the monthly high (0.6038).
- Next area of interest comes in around 0.6070 (61.8% Fibonacci extension) but NZD/USD may stage further attempts to test the 2023 low (0.5774) if it fails to hold within last week’s range.
- A break/close below the 0.5740 (78.6% Fibonacci retracement) to 0.5760 (100% Fibonacci extension) region opens up the 2022 low (0.5512), with the next area of interest coming in around 0.5460 (78.6% Fibonacci extension).
Additional Market Outlooks
US Dollar Forecast: USD/CAD to Face Uptick in US PCE Index
Gold Price Stages Five-Day Rally for First Time Since March
US Dollar Forecast: USD/CHF Rally Eyes July High
GBP/USD Selloff Pushes RSI Up Against Oversold Zone
--- Written by David Song, Senior Strategist
Follow on X at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Contracts for Difference (CFDs) are not available to US residents.
FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.
Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.
© FOREX.COM 2024