NZD/USD on Cusp of Testing September Low Ahead of RBNZ Rate Decision

New Zealand Dollar Outlook: NZD/USD

NZD/USD is on the cusp of testing the September low (0.6107) as it slips to a fresh monthly low (0.6108), and the Reserve Bank of New Zealand (RBNZ) meeting may keep the exchange rate under pressure as the central bank is expected to lower the official cash rate (OCR) for the second time this year.

NZD/USD on Cusp of Testing September Low Ahead of RBNZ Rate Decision

Keep in mind, the recent selloff in NZD/USD emerged following the failed attempt to test the July 2023 high (0.6412), with the weakness in the exchange rate keeping the Relative Strength Index (RSI) out of overbought territory.

Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here

In turn, NZD/USD may struggle to retain the advance from the yearly low (0.5850) as the RSI falls to its lowest level since August, and the RBNZ meeting may drag on the New Zealand Dollar as the central bank is expected to implement a 50bp rate cut.

New Zealand Economic Calendar

It seems as though the RBNZ will continue to alter the course for monetary policy as the central bank projects ‘the OCR to decline over time,’ and it remains to be seen if Governor Adrian Orr and Co. will further unwind its restrictive policy at its last meeting for 2024 as ‘the OCR needs to decline sooner than previously assumed, in order for inflation to sustainably settle at the 2 percent target midpoint in the medium term.’

With that said, NZD/USD may continue to carve a series of lower highs and lows should the RBNZ retain a dovish forward guidance, but the exchange rate may attempt to retrace the decline from the start of the month if the central bank delivers a hawkish rate cut.

NZD/USD Price Chart – Daily

Chart Prepared by David Song, Strategist; NZD/USD on TradingView

NZD/USD extends the decline from the September high (0.6379) to mark the longest selloff since August 2023, with a breach below the September low (0.6107) raising the scope for a move towards 0.6070 (61.8% Fibonacci extension).
A break/close below the 0.5910 (61.8% Fibonacci extension) to 0.5960 (23.6% Fibonacci retracement) region opens up the yearly low (0.5850) but NZD/USD may stage a rebound should it defend the September low (0.6107).
Need a move above the weekly high (0.6213) for NZD/USD to negate the bearish price series, with a break/close above the 0.6220 (50% Fibonacci extension) to 0.6270 (38.2% Fibonacci retracement) bringing the monthly high (0.6351) on the radar.

Additional Market Outlooks

US Dollar Forecast: USD/CAD Rally Eyes September High

AUD/USD Forecast: RSI Continues to Move Away from Overbought Zone

EUR/USD Vulnerable on Close Below 50-Day SMA

USD/JPY Outlook Mired by Negative Slope in 50-Day SMA

--- 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.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.