CFD Trading Rate New Zealand Dollar vs US Dollar (NZDUSD)

• The NZD/USD pair reaches the 10-week low of 0.5987 on Friday.
• Michigan Consumer Sentiment Index is expected to come in at 69.0 in October, against its previous 68.9 reading.
• ANZ-Roy Morgan Consumer Confidence index fell to 91.2 in October, breaking a three-month upward trend.

The NZD/USD pair has given up recent gains from the previous session, trading around 0.6000 during early European hours on Friday. The pair reaches a 10-week low of 0.5987 earlier in the Asian session.

On Thursday, data indicated that US unemployment claims dropped significantly in late October, underscoring the strength of the labor market. Additionally, a rise in the S&P PMI further highlights robust momentum in the private sector.

The recent positive US data supported the growing expectations that the Federal Reserve (Fed) will adopt a less aggressive approach to rate cuts than previously anticipated. Traders will be watching US Durable Goods Orders and the Michigan Consumer Sentiment Index data, due later in the North American session.

Additionally, the USD is also strengthened by uncertainties surrounding the upcoming US presidential election. According to a recent Reuters/Ipsos poll, Vice President Kamala Harris holds a narrow lead of 46% to 43% over former President Donald Trump in a six-day poll that concluded on Monday.

Republican nominee Donald Trump expressed his intent on Thursday to build an economy that supports all American communities. Meanwhile, Vice President Kamala Harris received support from rock legend Bruce Springsteen, entertainer Tyler Perry, and former President Barack Obama at a rally in Georgia.

In New Zealand, the ANZ-Roy Morgan Consumer Confidence index declined to 91.2 in October from 95.1 in September, breaking a three-month upward trend.

Traders remain cautious as labor market challenges continue to weigh on market sentiment despite anticipated interest rate cuts from the Reserve Bank of New Zealand (RBNZ). However, rising house prices are helping to bolster overall confidence, inflation has begun to stabilize within the RBNZ's target range.

• NZD/USD edges lower on Friday amid the emergence of some USD dip-buying.
• Bets for smaller Fed rate cuts and Middle East tensions underpin the Greenback.
• Expectations for aggressive rate cuts by RBNZ further exert pressure on the pair.

The NZD/USD pair attracts some sellers during the Asian session on Friday and currently trades around the 0.6000 mark, just above its lowest level since August 16 touched earlier this week. 

Expectations that the Federal Reserve (Fed) will proceed with modest rate cuts as the economy remains on a strong footing help the US Dollar (USD) to stall the previous day's retracement slide from a nearly three-month top. Apart from this, Middle East tensions, along with the US political uncertainty, benefit the Greenback's relative safe-haven status and turn out to be a key factor exerting some pressure on the NZD/USD pair. 

Adding to this, bets for a more aggressive interest rate cut by the Reserve Bank of New Zealand (RBNZ) undermine the New Zealand Dollar (NZD) and further contribute to the offered tone surrounding the currency pair. This, along with the recent breakdown below a technically significant 200-day Simple Moving Average (SMA), suggests that the path of least resistance for the NZD/USD pair remains to the downside. 

That said, the lack of follow-through selling makes it prudent to wait for acceptance below the 0.6000 psychological mark before positioning for an extension of the downfall witnessed since the beginning of this month. Traders now look to the US economic docket – featuring Durable Goods Orders and the Revised Michigan Consumer Sentiment Index – for some impetus and grab short-term opportunities around the NZD/USD pair.

Oversold decline could extend to 0.5985 before stabilisation can be expected. In the longer run, potential for further declines could be limited; the levels to watch are 0.5985 and 0.5970, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.  

The levels to watch are 0.5985 and 0.5970

24-HOUR VIEW: “Our view for NZD to trade in a range yesterday was incorrect. Instead of trading in a range, it fell sharply to 0.5993. Although oversold, the decline could extend to 0.5985 before stabilisation can be expected. Today, a sustained break below this level seems unlikely. Resistance is at 0.6020; a breach of 0.6040 would mean that the weakness in NZD has stabilised.”

1-3 WEEKS VIEW: “On Tuesday (22 Oct, spot at 0.6030), we indicated that ‘the recent price action indicates that 0.6005 is within reach.’ We added, ‘Looking ahead, the next level to watch below 0.6005 is 0.5985.’ Yesterday, NZD dropped below 0.6005, reaching a low of 0.5993. While we continue to expect NZD to decline, the weakness that started early this month appears to be overextended, both time- and price-wise. In other words, the potential for further decline could be limited. The levels to watch are 0.5985 and 0.5970. Should NZD break above 0.6060 (‘strong resistance’ level previously at 0.6085), it would mean that NZD is not declining further.”

• NZD/USD finds fresh buying interest near 0.6000, while the near-term trend remains bearish.
• The US Dollar’s outlook remains firm due to multiple tailwinds.
• Traders expect the RBNZ to cut interest rates again by 50 bps in November.

The NZD/USD pair bounces back from the psychological support of 0.6000 in Thursday’s European session. The Kiwi pair rebounds as the US Dollar (USD) corrects after posting a fresh high in 12 weeks. The US Dollar Index (DXY) faces pressure while attempting to break above the key resistance of 104.50.

The US Dollar could resume its upside trend amid uncertainty over United States (US) 2024 presidential elections. Meanwhile, the recent rally in the Greenback suggests that trades price in former US President Donald Trump’s victory over current Vice President Kamala Harris.

The US Dollar has also benefitted from growing expectations that the Federal Reserve (Fed) will pursue a modest interest rate cut path.

Meanwhile, the New Zealand Dollar (NZD) is expected to remain weak as traders have priced in 50 basis points (bps) interest rate reduction from the Reserve Bank of New Zealand (RBNZ) in its last meeting of the year on November 27, a similar move seen on October 9. This would be the third straight interest rate cut by the RBNZ in a row.

NZD/USD finds a temporary support near 0.6000. However, the outlook of the Kiwi pair remains weak as it trades below the 61.8% Fibonacci retracement around 0.6050. The Fibo tool is plotted from the July 29 low at 0.5857 to the September 30 high at 0.6380.

Downward-sloping 20- and 50-day Exponential Moving Averages (EMAs) near 0.6100 and 0.6130, respectively, suggests more weakness ahead.

The 14-day Relative Strength Index (RSI) oscillates below 40.00, indicating a strong bearish momentum.

More downside is highly likely towards the August 15 low of 0.5974 and the round-level support of 0.5900 if the pair decisively breaks below the psychological support of 0.6000.

On the flip side, a reversal move above the October 8 high of 0.6146 will drive the asset towards the 50-day EMA at 0.6173 and the October 4 high near 0.6220.

NZD/USD daily chart

• The NZD/USD has appreciated as the Fed's Beige Book indicated minimal changes in economic activity across nearly all districts.
• The US Dollar Index trades just below its recent high of 104.57, marking its strongest point since late July.
• The New Zealand Dollar may struggle due to the rising likelihood of another rate cut in November by the RBNZ.

NZD/USD gains ground as the US Dollar (USD) faced downward pressure following the release of the Federal Reserve’s (Fed) Beige Book on Wednesday. The latest report indicated that economic activity was "little changed in nearly all Districts," in contrast to August's report, where three Districts reported growth and nine showed flat activity. The pair trades around 0.6010 during the Asian session on Thursday.

The US Dollar weakened slightly, driven by a modest dip in US Treasury yields. 2-year and 10-year yields on US Treasury bonds stand at 4.07% and 4.23%, respectively, at the time of writing. However, The US Dollar Index (DXY), which tracks the US Dollar’s (USD) value against six major currencies, surged to its highest level since late July, reaching 104.57 on Wednesday.

Signs of economic resilience and rising inflation concerns have lessened the chances of a significant rate cut by the Federal Reserve in November. According to the CME FedWatch Tool, there is an 88.9% probability of a 25-basis-point rate cut, with no expectation of a larger 50-basis-point cut.

Traders are likely to keep an eye on the S&P Global Purchasing Managers Index (PMI), a leading indicator gauging US private-business activity in the manufacturing and services sector, which is set to be released on Thursday.

However, the upside of the New Zealand Dollar (NZD) could be limited due to rising odds of another rate cut in November by the Reserve Bank of New Zealand (RBNZ), with inflation easing and economic output remaining sluggish.

• NZD/USD extends losses, declining further in Wednesday's session.
• Oversold RSI reflects intensifying selling pressure but opens the possibility of an upwards correction.

The NZD/USD pair continued its downward trajectory on Wednesday, falling towards the 0.6000 psychological level as selling momentum resumed. Sellers remain in firm control, with the pair reaching lows not seen since August.

The Relative Strength Index (RSI) remains oversold, currently residing at 31. The indicator's downward slope signals increasing selling pressure, aligning with the red bars on the Moving Average Convergence Divergence (MACD) histogram, further confirming the growing bearish momentum.

NZD/USD daily chart

Technically, the NZD/USD remains below its key moving averages, with the 100-day Simple Moving Average (SMA) at 0.6100 and the 200-day SMA hovering around 0.6150 acting as formidable resistance levels. These barriers limit the pair's potential for upward momentum. However, the oversold nature of the RSI might be signaling that an upwards correction is on the horizon.

Support levels: 0.6000, 0.5950, 0.5930. Resistance levels: 0.6070, 0.6100, 0.6130

• NZD/USD retreats to 0.6020 as the US Dollar extends its upside.
• Dismal market sentiment due to US political uncertainty weighs on risk-sensitive assets.
• NZD/USD stays below the 61.8% Fibo retracement.

The NZD/USD pair falls back to near 0.6020 after a short-lived recovery in Wednesday’s European session. The Kiwi pair faces pressure as rising US Treasury yields have strengthened the US Dollar (USD) further. 10-year US bond yields rise to an almost 12-week high near 4.22% amid uncertainty over United States (US) presidential elections and Middle East risks staying afloat.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, climbs to near 104.40.

The outlook of the US Dollar has strengthened further as the International Monetary Find (IMF) has upwardly revised US growth projections for the current and the next year. The IMF expects the US economy to end 2024 and 2025 year with a Gross Domestic Product (GDP) growth of 2.8% and 2.2%, respectively.

Meanwhile, the New Zealand Dollar (NZD) remains fragile due to dismal market sentiment. A sharp decline in S&P 500 futures in European trading hours suggests weakness in investors’ risk appetite.

NZD/USD posts a fresh two-month low near 0.6020. The Kiwi pair resumed its downside journey after retreating from the 61.8% Fibonacci retracement around 0.6050. The Fibo tool is plotted from the July 29 low at 0.5857 to the September 30 high at 0.6380.

A bear cross, represented by the 20- and 50-day Exponential Moving Averages (EMAs) near 0.6150, suggests a downside trend.

The 14-day Relative Strength Index (RSI) oscillates below 30.00, indicating a strong bearish momentum.

More downside is highly likely towards the August 15 low of 0.5974 and the round-level support of 0.5900 if the pair breaks below the psychological support of 0.6000.

On the flip side, a reversal move above the October 8 high of 0.6146 will drive the asset towards the 50-day EMA at 0.6173 and the October 4 high near 0.6220.

NZD/USD daily chart

The New Zealand Dollar (NZD) is expected to trade in a range between 0.6020 and 0.6060. In the longer run, price action indicates that 0.6005 is likely within reach; the next level to watch below 0.6005 is 0.5985, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The next level to watch below 0.6005 is 0.5985

24-HOUR VIEW: “Our view for NZD to ‘continue to decline’ yesterday was incorrect. Instead of declining, it rebounded to 0.6060 before closing at 0.6041 (+0.18%). The current price movements are likely part of a range trading phase. Today, we expect NZD to trade between 0.6020 and 0.6060.”

1-3 WEEKS VIEW: “We continue to hold the same view as yesterday (22 Oct, spot at 0.6030). As highlighted, ‘the recent price action indicates that 0.6005 is within reach.’ Looking ahead, the next level to watch below 0.6005 is 0.5985. On the upside, if NZD breaks above 0.6085, it would mean that the weakness that started early this month has stabilised.”

• NZD/USD struggles to lure buyers amid the underlying bullish tone surrounding the USD.
• Bets for smaller Fed rate cuts and elevated US bond yields continue to boost the buck.
• A weaker risk tone also undermines demand for the Kiwi amid dovish RBNZ expectations.

The NZD/USD pair fails to capitalize on the previous day's modest recovery gains and seesaws between tepid gains/minor losses through the Asian session on Wednesday. Spot prices currently trade around the 0.6035-0.6040 region and remain close to over a one-month low touched on Tuesday amid a bullish US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, prolongs its monthly uptrend and climbs to its highest level since early August in the wake of bets for a less aggressive policy easing by the Federal Reserve (Fed). In fact, the markets have fully priced out the possibility of another jumbo Fed rate cut in November as the recent US macro data suggested that the economy remains on strong footing. 

Apart from this, the risk-off impulse, persistent geopolitical risks stemming from the ongoing conflicts in the Middle East and the US political uncertainty turn out to be other factors underpinning the safe-haven buck. The New Zealand Dollar (NZD), on the other hand, is pressured by expectations that the Reserve Bank of New Zealand (RBNZ) will cut rates aggressively. This further contributes to capping the NZD/USD pair.

From a technical perspective, the recent breakdown below the 200-day Simple Moving Average (SMA) and the lack of buying interest suggest that the path of least resistance for the NZD/USD pair is to the downside. Hence, any attempted recovery move is more likely to attract fresh sellers and remain capped. Traders now look to the US Existing Home Sales data and Richmond Fed President Thomas Barkin's speech for a fresh impetus.

• NZD/USD recovers and seems some gains after Monday’s losses.
• Oversold RSI hints at potential corrective upswing.
• The potential correction might take the pair to revisit the 100-day SMA.

Tuesday's session brought a reprieve from the NZD/USD's recent bearish streak, as the pair managed to recoup some of its losses, rising by 0.15% to settle at 0.6045. While the technical outlook remains mixed, the latest price action and indicator readings suggest a potential shift in market sentiment.

The Relative Strength Index (RSI) has rebounded sharply from the negative area, signaling a decline in selling pressure. The indicator's current reading of 37, combined with its upward trajectory, indicates that favorable buying conditions have emerged. The Moving Average Convergence Divergence (MACD) histogram, however, remains flat and red, suggesting that selling forces have not yet relinquished control.

NZD/USD daily chart

Technically, the NZD/USD pair remains constrained within a range bounded by key support and resistance levels. The critical 100 and 200-day Simple Moving Averages (SMAs) continue to act as formidable barriers at 0.6100 and are likely to impede any significant upward momentum. Despite these obstacles, the pair's recent recovery from lows since mid-August indicates that buyers may be regaining their footing.

Potential for the New Zealand Dollar (NZD) to continue to decline; given the oversold conditions, it is unlikely to break clearly below 0.6005. In the longer run, price action indicates that 0.6005 is likely within reach; the next level to watch below 0.6005 is 0.5985, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Next level to watch below 0.6005 is 0.5985

24-HOUR VIEW: “We did not expect the sharp drop in NZD that reached a low of 0.6027 (we were expecting range trading). Although the sharp drop appears to be overdone, there is potential for NZD to continue to decline. Given the oversold conditions, NZD is unlikely to break clearly below the major support at 0.6005. On the upside, any intraday rebound is expected to face strong resistance at 0.6060 with minor resistance at 0.6045.”

1-3 WEEKS VIEW: “Yesterday (21 Oct, spot at 0.6075), we highlighted that “momentum is beginning to slow, and the likelihood of NZD decline further to 0.6005 has decreased. We did not expect the subsequent sharp drop to 0.6027. The price action indicates that 0.6005 is likely within reach. The next level to watch below 0.6005 is 0.5985. On the upside, the ‘strong resistance’ level has moved lower to 0.6085 from 0.6115. A breach of the 0.6085 would mean that the weakness in NZD that started early this month has stabilised.”

• NZD/USD rebound from over a two-month low amid a modest USD downtick.
• A combination of factors should limit the USD slide and cap gains for the pair.
• The setup supports prospects for the emergence of fresh selling at higher levels. 

The NZD/USD pair stages a modest recovery from the 0.6020 area, or its lowest level since August 16 touched this Tuesday and sticks to its intraday gains through the first half of the European session. Spot prices currently trade around the 0.6060 region, up 0.45% for the day, and draw support from a weaker US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, eases from its highest level since early August as bulls take a breather following the recent strong rally since the beginning of this month. However, growing acceptance that the Federal Reserve (Fed) will proceed with modest rate cuts should limit any meaningful USD corrective slide. This, along with expectations that the Reserve Bank of New Zealand (RBNZ) will cut rates aggressively and a softer risk tone, should cap gains for the risk-sensitive NZD/USD pair. 

From a technical perspective, the recent breakdown below the very important 200-day Simple Moving Average (SMA) was seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold territory. This, in turn, suggests that the path of least resistance for the NZD/USD pair is to the downside. Hence, any subsequent move up might still be seen as a selling opportunity near the 0.6100 round-figure mark, which should now act as a key pivotal point.

The said barrier is followed by the 0.6120-0.6125 supply zone, which if cleared decisively will suggest that spot prices have formed a near-term bottom and pave the way for additional gains. The NZD/USD pair might then aim to clear the 0.6175-0.6180 intermediate barrier and reclaim the 0.6200 round-figure mark before climbing further towards the next relevant hurdle near the 0.6230-0.6235 region.

On the flip side, the 0.6025-0.6020 region, or the daily trough, might continue to protect the immediate downside ahead of the 0.6000 psychological mark. A convincing break below the latter will reaffirm the negative outlook and drag the NZD/USD pair to the 0.5950 horizontal support. The downward trajectory could extend further towards the 0.5930 intermediate support en route to sub-0.5900 levels and the August monthly swing low, around mid-0.5800s.

NZD/USD daily chart

• NZD/USD may face challenges due to dovish sentiment surrounding the RBNZ’s policy outlook.
• New Zealand's monthly Trade Balance reported a deficit of $2.1 billion in September, against the previous deficit of 2.3 billion.
• The US Dollar gains support from increased risk aversion as concerns grow over a potential resurgence of inflation in the US.

NZD/USD recovers some of its recent losses, trading around 0.6040 during Tuesday's Asian session. However, the New Zealand Dollar (NZD) faces pressure as the likelihood of further rate cuts in November by the Reserve Bank of New Zealand (RBNZ) grows, with inflation easing and economic output remaining sluggish.

In September, New Zealand's monthly Trade Balance showed a deficit of $2.1 billion, with Exports increasing by $246 million (5.2%) to $5.0 billion, while Imports declined by $67 million (0.9%) to $7.1 billion.

The NZD may have found some support following China’s rate cuts on Monday. As New Zealand's largest trading partner, China’s decision to lower its 1-year Loan Prime Rate (LPR) to 3.10% from 3.35% and its 5-year LPR to 3.60% from 3.85% could stimulate domestic economic activity, potentially boosting demand for New Zealand exports.

The US Dollar (USD) gained support following a surge in US Treasury yields, which climbed over 2% on Monday. At the time of writing, the 2-year and 10-year US Treasury bond yields stand at 4.02% and 4.18%, respectively. This rise was fueled by signs of economic resilience and growing concerns about a potential resurgence of inflation in the United States, reinforcing expectations of tighter monetary policy.

Recent economic data dispelled the likelihood of a bumper rate cut by the Federal Reserve (Fed) in November. According to the CME FedWatch Tool, the likelihood of a 25-basis-point rate cut in November is 89.1%, with no expectation of a larger 50-basis-point cut.

Federal Reserve Bank of Minneapolis President Neel Kashkari highlighted on Monday that the Fed is closely monitoring the US labor market for signs of rapid destabilization. Kashkari cautioned investors to anticipate a gradual pace of rate cuts over the coming quarters, suggesting that any monetary easing will likely be moderate rather than aggressive.

• NZD/USD plunges, technical outlook remains bearish.
• RSI nears oversold zone, hinting at potential correction.
• MACD suggests persistent bearish momentum.

In Monday's session, the NZD/USD pair extended its downward trajectory, depreciating by a significant 0.70% to settle at 0.6030. The technical indicators maintain a bearish stance, signaling a possible continuation of the selling pressure that has characterized recent trading.

The Relative Strength Index (RSI) remains near the oversold area, with a reading of 35 and a descending slope. This indicates a rise in selling pressure, suggesting that the bears continue to exert their influence. However, the proximity to the oversold zone raises the possibility of a corrective bounce if the selling momentum wanes. The Moving Average Convergence Divergence (MACD) histogram, displaying rising red bars, confirms the bearish trend. The histogram's upward movement indicates increasing bearish momentum, while the red color denotes a negative trend.

NZD/USD daily chart

The NZD/USD pair faces significant technical challenges, indicating a bearish outlook. The pair has been trading below key support levels, including the critical 100 and 200-day Simple Moving Averages (SMAs), which currently reside around 0.6100. The pair now stands in lows since mid-August and it may be set for further downside if buyers don’t step in.

If selling continues, the next support is around 0.6000. Conversely, a recovery might see immediate resistance emerging around 0.6060,0.6080 and 0.6100.

Momentum is beginning to slow; the likelihood of the New Zealand Dollar (NZD) declining further to 0.6005 has decreased, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Likelihood of NZD declining to 0.6005 decreases

24-HOUR VIEW: “We noted last Friday that ‘momentum indicators are mostly flat, and we continue to expect NZD to trade in a range, probably between 0.6040 and 0.6080.’ NZD then traded in a narrower range of 0.6055/0.6079. Momentum indicators remain flat, and we continue to expect NZD to trade in a range, likely between 0.6055 and 0.6090.”

1-3 WEEKS VIEW: “In our most recent narrative from last Wednesday (16 Oct, spot at 0.6060), we highlighted that NZD ‘is likely to decline further, and the level to watch is 0.6005.’ We also highlighted that ‘Overall, only a breach of 0.6115 (‘strong resistance’ level) would mean that the weakness in NZD that started early this month has stabilised.’ NZD traded in a quiet manner the last couple of days. Momentum is beginning to slow, and the likelihood of NZD declining further to 0.6005 has decreased.”

• NZD/USD could test the immediate support around a two-month low at 0.6039 level.
• The daily-chart analysis suggests the short-term market bias is bearish for the pair.
• A break above the immediate resistance at the nine-day and 50-day EMAs could trigger a shift toward a bullish bias.

The NZD/USD loses ground after two days of gains, trading around 0.6060 during Monday’s European hours. The analysis of the daily chart shows that the pair remains below the nine-day Exponential Moving Average (EMA), which suggests the short-term market bias is bearish.

Additionally, the 14-day Relative Strength Index (RSI) consolidates below the 30 level, reinforcing the current bearish sentiment. Furthermore, the nine-day Exponential Moving Average (EMA) remains below the 50-day EMA, highlighting weakness in the short-term price trend for the pair.

On the downside, the NZD/USD pair tests immediate support around a two-month low at 0.6039 level, which was recorded on October 16, followed by the psychological level of 0.6000. A break below this level could exert downward pressure on the pair to re-test the area around the "pullback support" near the 0.5850 level.

In terms of resistance, the immediate resistance appears at the nine-day Exponential Moving Average (EMA) around the level of 0.6089, followed by the 50-day EMA at 0.6146 level. A break above the latter could cause the emergence of the short-term bullish bias, potentially allowing the NZD/USD pair to target the psychological level of 0.6200.

NZD/USD: Daily Chart

• NZD/USD gains ground to around 0.6075 in Monday’s Asian session. 
• The Chinese central bank reduced the 1-year Loan Prime Rate to 3.10% from 3.35%, bigger than expected. 
• Expectations for a less aggressive Fed easing might support the USD. 

The NZD/USD pair trades in positive territory near 0.6075 during the early Asian session on Monday. The pair edges higher amid the softer US Dollar (USD) broadly and the announcement of China rate cuts. Later on Monday, the Federal Reserve (Fed) Neel Kashkari and Jeffrey Schmid are scheduled to speak. 

On Monday, the People's Bank of China (PBoC) decided to cut the one-year Loan Prime Rate (LPR) by 25 basis points (bps) from 3.35% to 3.10% and cut the five-year LPR from 3.85% to 3.60%. China’s latest move to revive growth and fight off deflation is likely to support New Zealand (NZD) as China is a major trading partner for New Zealand. 

However, the rising expectation of more aggressive easing from the  Reserve Bank of New Zealand (RBNZ) amid a fall in inflation to the central bank's target range of 1% to 3% in the third quarter could cap the upside for the NZD. 

On the other hand, bets for a less aggressive Fed policy easing might lift the Greenback against the Kiwi. The chance of an additional quarter-point rate cut in November stands at more than 90%. Financial markets have priced in two 25 basis points (bps) interest rate cuts before the end of 2024 and further rate cuts next year, likely bringing the policy rate to a 3.25%-3.5% range by September 2025, per Reuters. 

The New Zealand Dollar (NZD) is likely to trade in a range between 0.6040 and 0.6080. In the longer run, NZD is likely to decline further; the level to watch is 0.6005, UOB Group’s FX analysts Quek Ser Leang and Peter Chia notes.  

The level to watch is 0.6005

24-HOUR VIEW: “Yesterday, we expected NZD to trade in a range between 0.6035 and 0.6090.NZD then traded in a narrower range than expected (0.6045/0.6075). NZD closed largely unchanged at 0.6060 (-0.06%). Momentum indicators are mostly flat, and we continue to expect NZD to trade in a range, probably between 0.6040 and 0.6080.”

1-3 WEEKS VIEW: “We continue to hold the same view as two days ago (16 Oct, spot at 0.6060). As highlighted, NZD is likely to decline further, and the level to watch is 0.6005. Overall, only a breach of 0.6115 (no change in ‘strong resistance’ level) would mean that the weakness in NZD that started early this month has stabilised.”

• NZD/USD attracts some buying on Friday amid a modest USD weakness.
• Mixed Chinese macro data fails to impress bulls or provide any impetus. 
• Bets for smaller Fed rate cuts and dovish RBNZ expectations cap the pair.

The NZD/USD pair trades with a positive bias for the second straight day on Friday, albeit lacks bullish conviction and remains close to over a one-month low touched earlier this week. Spot prices hover around the 0.6070 region and draw support from a modest US Dollar (USD) downtick.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, pulls back from its highest level since early August as traders opt to take some profits off the table following a strong rally since the beginning of this month. This, along with a generally positive tone around the equity markets, offers some support to the risk-sensitive Kiwi, though concerns about a slowdown in China act as a headwind.

Official data released earlier today showed that China's economy expanded 4.6% year-on-year in the July-September period, slightly slower than the 4.7% growth recorded in the previous quarter. This marked the lowest reading in 18 months and was below the government's full-year target of 5%, offsetting the better-than-expected Retail Sales and Industrial Production figures for the month of September. 

Furthermore, the downside for the USD seems cushioned in the wake of growing acceptance that the Federal Reserve (Fed) will proceed with modest rate cuts as the economy remains on solid footing. Apart from this, expectations that the Reserve Bank of New Zealand (RBNZ) will cut rates aggressively amid a fall in domestic inflation to the central bank's target range of 1% to 3% in the third quarter should cap the NZD/USD pair.

Even from a technical perspective, the recent breakdown below the very important 200-day Simple Moving Average (SMA) suggests that the path of least resistance for spot prices remains to the downside. Hence, any subsequent move up might still be seen as a selling opportunity. Traders now look to the US housing market data and Fed Governor Christopher Waller's speech for a short-term impetus heading into the weekend.