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

• NZD/USD drifts lower to 0.6012 on the stronger USD on Friday. 
• US Initial Jobless Claims last week jumped to 221K compared to 212K prior, the highest since January.
• The RBNZ is expected to keep interest rates on hold at its policy meeting next week.

The NZD/USD pair trades on a softer note near 0.6012 on Friday amid the firmer US Dollar (USD). The markets turn to a cautious mood ahead of the key US labor market data, including Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings for March.

The Labor Department reported on Thursday that the weekly Initial Jobless Claims last week went up to the highest level since January. The number of Americans filing new claims for unemployment benefits jumped to 221K for the week ended March 30 compared to 212K prior, below the consensus of 214K. Additionally, the Continuing Claims decreased to 1.791M in the week ended March 23.

Investors will shift their focus to the highly-anticipated Nonfarm Payrolls (NFP), due on Friday. The NFP figure is projected to show that the US economy added 200K jobs in March from 275K rise in February. Meanwhile, the Unemployment Rate is forecast to remain steady at 3.9% in March. If the US NFP data portrays a stronger-than-expected result, this might temper June Fed rate-cutting expectations, offering some support to the Greenback and dragging the NZD/USD pair lower. According to the CME FedWatch Tool, financial markets are now pricing in nearly 65% odds that the Fed will lower its interest rate in June, up from 60% in the previous week. 

On Thursday, the New Zealand Building Permits improved to 14.9% MoM in February from an 8.6% decline in the previous reading, Statistics New Zealand showed. The Reserve Bank of New Zealand (RBNZ) is expected to keep interest rates on hold at its policy meeting next week. The central bank noted that it needs to keep policy restrictive to ensure that inflation expectations become fully anchored. However, investors will take more cues from the policy statement, the dovish tweaks to the outlook might drag the New Zealand Dollar (NZD) and create a headwind for the pair. 

• The hourly chart signals a possible short-term rise in selling pressure with a shar decline in the RSI.
• The negative outlook remains on the daily chart.
• The bearish crossover between the 20 and 200-day SMAs implies a strong negative momentum.

The NZD/USD pair is trading at around 0.6025 and trimmed most of its daily gains on Thursday. After getting rejected by the 20-day Simple Moving Average (SMA) the latest upwards movements seem to have been short-lived and didn’t present a battle to the bearish overall trend.

On the daily chart, the Relative Strength Index (RSI) has shown slow movement from negative to positive territory over past sessions and now resides at around 47.15. However, the flat red bars of the Moving Average Convergence Divergence (MACD) indicate a steady negative momentum.

NZD/USD daily chart

On the hourly chart, the RSI proved more erratic, reaching a positive value of 70 earlier in the session and dropping to 50. This fluctuation suggests a possible short-term shift in momentum favoring the sellers. The MACD, continues to print red flat bars, indicating sustained negative momentum throughout recent hours.

NZD/USD hourly chart

Concerning its Simple Moving Averages (SMAs), the NZD/USD is below the 20,100 and 200-day SMAs. Thursday’s 20-day SMA rejection adds further arguments that the bullish momentum is weak. Moreover, the mentioned average completed a bearish crossover with the 200-day SMA which may eventually limit any upward momentum.

• NZD/USD has probably reversed its downtrend on the short-term timeframe. 
• It was falling in a large Measured Move pattern, however, there is a chance this may not reach the target for C. 
• A bullish close on Thursday would result in a “Three White Soldiers” Japanese candlestick reversal pattern on the daily chart. 

NZD/USD has been broadly falling in a bearish three-wave pattern, known as a Measured Move but intraday charts are now signaling that the short-term trend has probably reversed. 

Measured move price patterns are composed of an A, B, and C leg, in which waves A and C are commonly of the same length – or related by a 0.618 Fibonacci ratio. 

 New Zealand Dollar versus US Dollar: Daily chart

The pattern on NZD/USD has already fallen to its conservative target at the point where C being equal to a 0.618 Fibonacci ratio of wave A (0.5988). It has not yet reached the target calculated as equal to the length of wave A. 

Over the last three days the exchange rate has reversed, however, and risen up strongly, bringing into doubt whether the end of C will be achieved. 

If Thursday’s daily candle ends green and therefore bullish it will complete a Japanese candlestick reversal pattern called a bullish Three White Soldier pattern. This happens when three consecutive up days occur after a long downtrend. It would be accompanied by high bullish momentum reinforcing the pattern’s reliability – a signal the NZD/USD will probably go higher. 

The 4-hour chart, commonly used to assess the short-term trend of an asset, is showing NZD/USD has probably reversed over that timeframe. 

 New Zealand Dollar versus US Dollar: 4-hour chart

Since the April 1 lows, NZD/USD has rallied strongly. It has broken above the last swing high of the prior downtrend at 0.5995 and has completed two sets of higher highs and higher lows. It has done all this on high bullish momentum. This indicates the short-term trend has probably reversed. 

The Relative Strength Index (RSI) momentum indicator is now in overbought territory, however, indicating price is overbought and there is an increased risk the pair could pull back. If it exits overbought and returns to neutral territory it will give a sell-signal and a correction is anticipated. Such a correction could very well fall back down to the 0.5995 highs for support. 

Since RSI has entered overbought it recommends for long holders trading over a short-term time frame to not increase the size of their positions. If NZD/USD exits overbought it will be a sign to liquidate longs and open shorts. 

Resistance from the 100-4 hour Simple Moving Average (SMA) at 0.6034 adds credence to the possibility of a pullback evolving.

• NZD/USD gains ground as domestic Building Permits showed a notable increase in February.
• New Zealand’s Building Permits MoM rose by 14.9% in February against the previous decline of 8.6%.
• US ISM Services PMI fell to 51.4 in March from 52.6 in February.

NZD/USD continues its upward momentum for the third consecutive day, reaching near 0.6020 during the Asian session on Thursday. The seasonally adjusted Building Permits (Month-on-Month) data released by Statistics New Zealand showed improvement, with a notable increase of 14.9% in February, rebounding from the previous decline of 8.6%.

However, the Reserve Bank of New Zealand (RBNZ) cautioned that headline inflation remains outside the desired range of 1 to 3%. Investors are eagerly awaiting the RBNZ's policy meeting scheduled for next week. Additionally, investors are expressing concerns over the potential economic impact of a 7.2 magnitude earthquake that struck Taiwan on Wednesday, particularly on the semiconductor supply chain in New Zealand.

The US Dollar (USD) encountered challenges following the release of mixed economic data from the United States (US), consequently, underpinning the NZD/USD pair. In March, the US ADP Employment Change rose by 184,000, surpassing February's increase of 155,000 and exceeding the market consensus of 148,000. However, the US ISM Services PMI declined to 51.4 from 52.6 in February, falling short of the anticipated level of 52.7.

The US Dollar Index (DXY) struggles as Federal Reserve (Fed) Chair Jerome Powell reiterated the central bank's readiness to implement rate cuts, emphasizing a data-dependent approach. Additionally, remarks from Atlanta Fed President Raphael Bostic, advocating for a rate cut in the final quarter of 2024. Furthermore, market participants are expected to closely monitor the release of US Initial Jobless Claims for the week ending on March 29, scheduled for Thursday.

• The daily RSI recovered from near-oversold levels.
• The hourly chart indicators exhibited a sharp uptick with the RSI above 70.
• Buyers need to breach the key 20-day SMA for further ascents.

The NZD/USD was trading around the 0.6000 zone during Wednesday's session, reflecting an increase of 0.55%. The technical outlook indicates that sellers have had a more significant influence on the market. Nevertheless, buying momentum grew during the session as the Greenback was one of the weakest performers due to fundamental reasons.

On the daily chart, the Relative Strength Index (RSI) predominantly exists in negative territory, despite Wednesday’s recovery from oversold areas, and currently stands at 44. This indicates that stronger market influence is currently in the hands of sellers despite the slight recovery.

NZD/USD daily chart

Turning to the hourly chart, an upward trend in the RSI was observed, reaching a peak at 76 before falling slightly to 71 as investors took some profits. At the same time, the Moving Average Convergence Divergence (MACD) histogram exhibited flat green bars, hinting at a waning short-term momentum. Despite an active sellers' market on the daily chart, the hourly indicators suggest a more balanced market with potential opportunities for buyers.

NZD/USD hourly chart

Broadly speaking, the NZD/USD is currently performing under a bearish signal across all Simple Moving Averages (SMA) as it trades below its 20,100-day, and 200-day  averages. The completed SMA crossover between the 20 and 200-day averages adds arguments for a negative outlook and could limit the pair's upside.

• NZD/USD reverses an Asian session dip and turns positive for the second straight day.
• The USD retreats further from a multi-month peak set on Tuesday and lends support.
• Reduced June Fed rate cut bets and a softer risk tone should help limit the USD losses.

The NZD/USD pair attracts some dip-buying during the Asian session on Wednesday and might now be looking to build on the overnight recovery move from levels just below mid-0.5900s, or the YTD low. Spot prices currently trade near the top end of the daily range, around the 0.5970-0.5975 region, and remain at the mercy of the US Dollar (USD) price dynamics.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, drift lower for the second successive day and moves away from its highest level since February 14, which, in turn, is seen acting as a tailwind for the NZD/USD pair. That said, reduced bets for rate cuts by the Federal Reserve (Fed) should help limit any meaningful downside for the Greenback and keep a lid on any further gains for the currency pair. 

Data released this week showed that the US manufacturing sector expanded in March for the first time since September 2022 and that demand for labor remains elevated. Adding to this, comments by a slew of influential FOMC members raised doubts over whether the Fed will cut interest rates three times this year. The current market pricing points to a total of 65 basis points (bps) rate cut for 2024, lower than the central bank's projected 75 bps. 

Meanwhile, the shift in expectations pushed the yield on the benchmark 10-year US government bond to a four-month high. This, along with a generally weaker tone around the equity markets, supports prospects for the emergence of some dip-buying around the safe-haven buck and caps the upside for the risk-sensitive Kiwi. Hence, it will be prudent to wait for strong follow-through buying before confirming that the NZD/USD pair has bottomed out.

Market participants now look forward to the US economic docket – featuring the release of the ADP report on private-sector employment and ISM Services PMI. Apart from this, traders will take cues from speeches by FOMC members, including Fed Chair Jerome Powell. This, along with the US bond yields and the broader risk sentiment, will drive the USD demand and contribute to producing short-term trading opportunities around the NZD/USD pair.

• On the daily chart, sellers maintain control over as indicators near oversold conditions.
• The hourly RSI recovered and moved deep in positive zone..
• A bearish crossover completed at 0.6070 may have confirmed the bearish bias for the short term.

The NZD/USD pair is currently trading at 0.5965, with a marginal gain of 0.13%. Despite these slight gains, the pairing continues to illustrate an overall bearish sentiment, with the selling force maintaining dominance over the market trend. On the shorter timeframes, a light of hope emerged ahead of the Asian session.

On the daily chart, the technical outlook for the NZD/USD pair is primarily bearish. The Relative Strength Index (RSI) remains in negative territory, with the latest reading at 36, flirting with the oversold threshold, indicating a steady dominance by sellers in the market. Meanwhile, the Moving Average Convergence Divergence (MACD) supports this negativity with decreasing red bars, suggesting strengthening downward momentum.

NZD/USD daily chart

In contrast, the hourly chart provides a somewhat different perspective. The latest RSI reading leaned towards positive territory at 60 while the hourly MACD affirms this with rising green bars, showing short-term positive momentum.

NZD/USD hourly chart

The inspection of the broader outlook reveals that the NZD/USD shows a bearish trend, given its position relative to its Simple Moving Averages (SMAs). The pair is below the 20-day, 100-day, and 200-day SMAs, indicating sustained downward bias in both the short-term and long-term contexts. Furthermore, the bearish crossover of the 20 and 200-day SMAs at the 0.6070 level suggests a persistent and significant downtrend is foreseeable, also endorsing the negative outlook.

In conclusion, while the daily chart illustrates a flattened negative trend, the oscillations on the hourly chart offer short-term trading nuances. Overall, the NZD/USD is primarily bearish, with a key focus on the 0.6070 SMA crossover which points for further confirmation of the downtrend.

• NZD/USD is declining in the final C leg of a bearish pattern. 
• The Measured Move is likely to fall to a target in the 0.5800s. 
• The RSI is oversold on the daily chart suggesting a risk of a pullback. 

NZD/USD is falling in a bearish three-wave pattern, known as a Measured Move. This type of pattern consists of three waves, usually labeled ABC, in which wave A and C are commonly of the same length – or related by a Fibonacci ratio. 

 New Zealand Dollar versus US Dollar: Daily chart

Assuming the pattern unfolds as expected, NZD/USD is likely to fall to a target at roughly 0.5847, corresponding to the end of wave C. 

NZD/USD has already broken below the conservative target for the pattern at 0.5988, measured as wave C being equal to a 0.618 Fibonacci ratio of wave A. 

The pair is in a short-term downtrend which, according to the adage that “the trend is your friend,” is likely to continue. 

The Relative Strength Index (RSI) momentum indicator, fixed at 29.32 on Monday’s close, is oversold which means there is now a risk of a pullback occurring. 

If the RSI exits oversold it will signal the price will probably rise and traders should close their short bets and open longs. 

If the RSI remains below 30 in the oversold zone it will signal traders should keep their short bets open but not add to them.

• NZD/USD remains on the defensive near its lowest level since November amid a bullish USD.
• Reduced bets for a June Fed rate cut and the risk-off mood lifts the USD to a multi-week top.
• Traders now look to the US macro data and speeches by Fed officials for short-term impetus.

The NZD/USD pair oscillates in a narrow trading band during the Asian session on Tuesday and consolidates its recent losses to the lowest level since November 14 touched the previous day. Spot prices hold steady around mid-0.5900s and seem vulnerable to prolonging a multi-week-old descending trend.

The US Dollar (USD) stands tall near its highest level since February 2024 touched in the aftermath of the upbeat US data on Monday, showing that the manufacturing sector registered growth in March for the first time since September 2022. The US ISM Manufacturing PMI increased to 50.3 in March from 47.8 in the previous month to end 16 straight months of contraction. This forced investors to trim their bets that the Federal Reserve (Fed) will start cutting interest rates in June, triggering a fresh leg up in the US Treasury bond yields and underpinning the buck.

In fact, the yield on the rate-sensitive two-year and the benchmark 10-year US government bonds climbed to a two-week peak, which, along with the risk-off impulse, should benefit the safe-haven Greenback and drive flows away from the risk-sensitive Kiwi. The NZD/USD pair, meanwhile, fails to gain any respite from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr's comments, saying that the MPC remains laser-focused on its job to control inflation. Orr added that the central bank is on track to getting inflation back into the target band.

Market participants now look to the US economic docket – featuring the release of JOLTS Job Openings and Factory Orders – for some impetus later during the early North American session. This, along with speeches by influential FOMC members, the US bond yields and the broader risk sentiment, might influence the USD price dynamics and produce short-term opportunities around the NZD/USD pair. Nevertheless, the aforementioned fundamental backdrop favours bearish traders and suggests that the path of least resistance for spot prices is to the downside.

• The daily chart of the pair reflects a prevailing negative trend with indicators flashing oversold signals.
• Indicators on the hourly chart also stand deep in the red zone.
• Moreover, a bearish SMA crossover further emphasizes the depth of the bearish outlook.

The NZD/USD pair is currently trading at 0.5950, showing a 0.50% decrease in the session. Sellers maintain control as the broader outlook remains bearish. However, some signs of a mild bullish reversal are emerging.

On the daily chart, the Relative Strength Index (RSI) value reveals a continuation of the negative trend. This suggests dominant selling conditions for this pair, signaling a possible oversold market soon. Conversely, the steady red bars of the Moving Average Convergence Divergence (MACD) also support this negative momentum.

NZD/USD daily chart

When examining the hourly chart, the RSI values largely stay within the negative zone, echoing the daily chart's sentiment. However, the most recent RSI reading at 41 shows a minor increase, which could suggest a glimmer of a short-term bullish reversal after the index fell below 30 earlier in the session. Even though the corresponding MACD bars remain red, additional upward movements could be seen ahead of the Asian session.

NZD/USD hourly chart

Upon inspecting the broader outlook, the NZD/USD is demonstrating bearish signals across all periods examined. In addition, the pair’s position below the 20, 100-day, and 200-day Simple Moving Averages (SMAs), implies a forecast of negative momentum in the short term. This downward trend is further confirmed by the potential bearish SMA crossover of 20 and 200-day SMAs at 0.6070. However, as the daily indicators enter oversold conditions, a corrective bullish reversal shouldn’t be taken off the table.

• NZD/USD edges lower to 0.5970 amid stronger USD and dovish comments from RBNZ. 
• The US economy grew faster than expected in the fourth quarter (Q4). 
• RBNZ’s Orr said the central bank is on course to get inflation back into the target band, rate cuts are getting closer.
• The US February Core PCE will be in the spotlight on Friday. 

The NZD/USD pair remains under some selling pressure near 0.5970 after retracing from the 0.6000 barrier during the Asian session on Friday. The dovish comments from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr weigh on the New Zealand Dollar (NZD). Investors await the release of US February Personal Consumption Expenditures (PCE) data on Friday for fresh catalysts. 

The US economy expanded faster than expected in the fourth quarter (Q4), owing to robust consumer spending and corporate investment, according to the third estimate released by the Bureau of Economic Analysis on Thursday. The final US Gross Domestic Product (GDP) for Q4 grew at an annual rate of 3.4% from the previous 3.2% estimate. The US Dollar (USD) edges higher following the stronger-than-expected data. 

On the Kiwi front, the RBNZ Governor Orr said the central bank is on track to getting inflation back into the target band while adding that interest rates have peaked and cuts are getting closer. The RBNZ indicated that it may cut rates from early next year. However, investors have priced in cuts from August this year. This, in turn, drags the NZD lower and acts as a headwind for the NZD/USD pair. 

The US Core PCE data will be released later on Friday, which is estimated to show an increase of 0.3% MoM and 0.8% YoY in February. If the report showed firmer readings, this could boost the USD. The Fed’s Chair Jerome Powell and Fed Bank of San Francisco President Mary Daly are set to speak later on Friday. 

• RBNZ Governor Orr was seen dovish, which seems to be applying pressure to the NZD.
• GDP and Initial Jobless Claims cushion the USD. Weak Chicago PMI figures limit the upside.
• Markets adjusted their expectations for a June rate cut which also adds strength to the USD.

The NZD/USD is currently traded at 0.5977, reflecting a decrease of 0.43%. The pair's movement was influenced by somewhat dovish comments from the Reserve Bank of New Zealand (RBNZ) Governor Orr and by mixed data from the US. Ahead of Friday’s session, markets await Personal Consumption Expenditures (PCE) data from the US from February.

RBNZ Governor Orr commented that inflation is normalizing while aggregate demand is slowing which would lead to a low and stable inflation on the horizon in hand with normalized interest rates. As a reaction markets are betting on 75 bps of easing in 2024, while the RBNZ hinted that the first cut would come in 2025 and as long as markets underestimate the bank, the NZD may suffer additional losses.

On the USD side, The recent release of Initial Jobless Claims data showed figures slightly below the consensus, with 210K reported against the anticipated 215K for the week ending on March 23. Additionally, the Q4 Gross Domestic Product (GDP) was revised upwards, showcasing a yearly growth of 3.4%. However, not all economic indicators were positive; the March Chicago Purchasing Managers Index (PMI) data from the Institute for Supply Management fell short of expectations, coming in at 41.4 against the forecasted 46 and previous 44.

Regarding the Federal Reserve (Fed) expectations, the probability of a rate cut in June has decreased to 66% from 85% earlier in the week, providing some support to the Greenback. That being said, the release of the headline Personal Consumption Expenditures (PCE) on Friday, will likely fuel volatility markets as investors may readjust their bets on the Fed.

NZD/USD technical analysis

On the daily chart, the NZD/USD pair's Relative Strength Index (RSI) is notably fixated within negative territory. The latest RSI reading swings back to a negative trend, marking a score of 33 which suggests a strong bearish sentiment in the market. Concurrently, the Moving Average Convergence Divergence (MACD) histogram prints red bars, evidencing a negative momentum that further reinforces the downward pressure on this currency pair.

Moving to the Simple Moving Average (SMA) analysis, the pair is trading below the respective 20, 100, and 200-day Simple Moving Averages (SMAs), supporting the continuing negative trend.

NZD/USD daily chart

• A combination of factors drags the NZD/USD pair to a fresh YTD trough on Thursday.
• Rising bets for a rate cut by RBNZ in July weigh on the Kiwi amid a softer risk tone.
• Sustained USD buying exerts additional pressure and contributes to the ongoing slide.

The NZD/USD pair comes under heavy selling pressure on Thursday and continues losing ground through the first half of the European session. The downward trajectory drags spot prices to the 0.5970-0.5965 region, or the lowest level since November 17, and is sponsored by a combination of factors.

The New Zealand Dollar (NZD) weakens after the business outlook survey by ANZ Bank showed weakening activity indicators and a slight fall in inflation pressures. Moreover, markets are pricing in an almost 50% chance the Reserve Bank of New Zealand (RBNZ) could cut rates as early as July. This, along with a fresh bout of the US Dollar (USD) buying, turn out to be key factors exerting downward pressure on the NZD/USD pair.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, climbs to over a one-month peak in the wake of Federal Reserve (Fed) Governor Christopher Waller's hawkish comments on Wednesday, which tempered rate cut bets. This remains supportive of elevated US Treasury bond yields, which, along with a softer risk tone, is seen benefitting the safe-haven buck and driving flows away from the risk-sensitive Kiwi.

With the latest leg down, the NZD/USD pair now seems to have confirmed a breakdown through the weekly trading range and the 0.6000 psychological mark. This, in turn, favours bearish traders and supports prospects for a further near-term depreciating move. market participants now look to the US economic docket – featuring the final Q4 GDP print, Weekly Initial Jobless Claims, Pending Home Sales and revised Michigan Consumer Sentiment Index.

NZD/USD is a shade below 0.6000. Economists at ANZ Bank analyze Kiwi’s outlook. 

Broader FX markets are likely to be illiquid and quiet into Easter

• NZD/USD loses ground on softer Kiwi data released on Thursday.
• ANZ – Roy Morgan Consumer Confidence fell to 86.4 in February from 94.5 prior.
• US GDP Annualized is expected to remain consistent at a 3.2% increase in Q4.

NZD/USD snaps its three-day winning streak, depreciating to near 0.5990 during the Asian hours on Thursday. The New Zealand Dollar (NZD) faces challenges due to the softer-than-expected domestic key economic figures, which in turn, undermine the NZD/USD pair.

ANZ – Roy Morgan Consumer Confidence decreased to 86.4 in February from 94.5 in the prior month. The index stepped down from January 2022 level highs. Business Confidence fell to 22.9 in March, from the previous reading of 34.7. Kiwi markets will observe Good Friday and Easter Monday.

At the Boao Forum for Asia (BFA), China's top legislator, Zhao Leji, underscored China's commitment to inclusive economic globalization. He articulated China's opposition to unilateralism and protectionism in all manifestations and expressed a dedication to closely aligning its development with that of other nations.

The US Dollar (USD) shows subdued momentum as investors await the release of Gross Domestic Product Annualized data for the fourth quarter of 2023 from the United States (US) on Thursday. Furthermore, Personal Consumption Expenditures for February on Friday. The US Dollar Index (DXY) hovers around 104.30. US Treasury yields rebounded after losses in the previous two sessions, supporting the US Dollar.

Market participants are eagerly awaiting guidance from the Federal Reserve (Fed) on its interest rate trajectory. However, conflicting views among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing are adding to market uncertainty.

• Rising seller traction is prevalent in the daily chart with the RSI deep in the negative area.
• The hourly chart signals a potential shift toward short-term bullish correction.
• The overall trend continues to be tilted to the downside.

The NZD/USD pair is operating at around 0.6000 with losses, The market landscape is primarily dominated by sellers, underscored by a prevailing negative trend. The pair resides below the important 20, 100, and 200-day Simple Moving Averages (SMAs), emphasizing the strong presence of sellers. However, the hourly chart has clues for a potential short-term bullish reversal.

The Relative Strength Index (RSI) oscillates within the negative territory on the daily chart. at 35 near the oversold area, underscoring the prominence of sellers in the market. Concurrently, the predominance of flat red bars in the Moving Average Convergence Divergence (MACD) histogram affirms this negative momentum.

NZD/USD daily chart

Switching to the hourly chart, the RSI moved towards its middle point but then retreated towards 40, implying a modest bias towards the buyers. In addition, the MACD histogram prints green bars which offer additional evidence of buyers gathering momentum.

NZD/USD hourly chart

Overall, the current dynamics of the NZD/USD pair infer a predominantly negative momentum. Nevertheless, the recovering indicators in the hourly chart point to a possible bullish reversal in the short term. Zooming out, the buyers must make a stride to reclaim the 200-day SMA at 0.6070 to avoid additional losses.

• NZD/USD is expected to see more downside due to multiple headwinds.
• Investors remain uncertain ahead of the US core PCE inflation for February.
• A breakdown of the Double Top formation weakens the Kiwi asset.

The NZD/USD pair finds interim support near 0.5990 in the European session on Wednesday. The Kiwi asset is vulnerable in the broader term as the New Zealand economy has shifted into a technical recession. The economy was contracted in the last two quarters of 2023.

The Reserve Bank of New Zealand (RBNZ) is facing a balancing act between high inflation and a poor economic outlook. To maintain downward pressure on stubborn inflation, the RBNZ maintains the Official Cash Rate (OCR) at 5.5%. However, economic activities bear the consequences. Low liquidity flow in an economy dampens firms’ investment plans and consumer spending.

Meanwhile, asset-specific action is being observed in global markets as risk-perceived currencies face the heat of uncertainty ahead of the United States core Personal Consumption Expenditure price index (PCE) data for February, which will be published on Good Friday. S&P 500 futures have posted significant gains in the London session.

The US Dollar Index (DXY) rises to 104.40, an inch away from monthly high of 104.50. 10-year US Treasury yields remain unchanged at 4.23%.

NZD/USD sees a sharp downside move after a breakdown of the Double Top chart formation near 0.6069 on a four-hour timeframe. The asset has tested territory below the psychological support of 0.6000 and is expected to discover more downside. The 50-period Exponential Moving Average (EMA) near 0.6040 is a major barricade for the New Zealand Dollar bulls.

The 14-period Relative Strength Index (RSI) oscillates in the bearish range of 20.00-60.000. Investors would look for building fresh shorts whenever the RSI witnessed a pullback to 60.00.

If the asset breaks below the intraday low of 0.5987, more downside will appear. This would drag the asset toward the November 17 low at 0.5940, followed by the round-level support of 0.5900.

In an alternate scenario, a recovery move above March 6 low at 0.6069 will drive the pair toward March 18 high at 0.6100. A breach of the latter will drive the asset further to March 12 low at 0.6135.

NZD/USD four-hour chart

• NZD/USD trades on a softer note near 0.6000 after retracing from a weekly top of nearly 0.6030 on Wednesday. 
• The rate-cutting expectation and dovish comments from Fed officials exert some pressure on the US Dollar. 
• The technical recession in New Zealand’s economy in Q4 2024 will leave ample space for RBNZ to cut the rate sooner than expected. 
• Investors await the RBNZ’s Orr speech for fresh impetus. 

The NZD/USD pair remains on the defensive around 0.6000 despite the weaker US Dollar (USD) during Wednesday’s early Asian session. The ANZ Business Confidence will be due from the New Zealand docket, and Reserve Bank of New Zealand (RBNZ) Governor Orr is set to speak later in the day. Nonetheless, the market is likely to be mute in light trading ahead of the Good Friday holiday.

The US Federal Reserve (Fed) decided to hold interest rates between 5.25% and 5.5% at its March meeting last week. The Fed Chair Jerome Powell did not specify the timing for cutting rates but hinted that the first rate cut will be determined by what inflation measures and other key economic data show. Several Fed officials agreed to wait and see more evidence of inflation that ensures it heads back down to the 2% target before it cuts rates. Fed Governor Christopher Waller and Chicago Fed President Austan Goolsbee anticipate three cuts this year. Dovish comments from Fed officials weigh on the Greenback against its rivals. 

On the Kiwi front, the technical recession in New Zealand’s economy in the final quarter of 2024 leaves ample space for the Reserve Bank of New Zealand (RBNZ) to cut the official cash rate (OCR) sooner than expected. An aggressive RBNZ rate-cutting cycle would in turn likely weigh on the NZD and create a headwind for the NZD/USD pair. 

The US Personal Consumption Expenditures Price Index (PCE) data for February are due on Friday. The Fed's Powell is also scheduled to speak on the same day. In the case of slowing inflation data, this could prevent any rate cuts from the Fed and exert some selling pressure on the USD. 

 

• NZD/USD hovers around 0.6000 in Tuesday’s early Asian session. 
• The US February New Home Sales came in at -0.3% MoM vs. 1.7% gain in January, weaker than expected. 
• Concerns over stunted economic growth and the slump in the GDP numbers weigh on the Kiwi. 

The NZD/USD trades on a flat note around the 0.6000 mark during the early Asian session on Tuesday. The USD Index (DXY) retreats from the recent peaks and remains above the 104.00 mark. Investors await the US February Personal Consumption Expenditures Price Index (PCE) data, which might offer some hints about underlying momentum in inflation.

On Monday, the US February New Home Sales dropped 0.3% MoM from a 1.7% gain in January, below the market expectations for a 2.3% MoM rise. Meanwhile, the Dallas Fed Manufacturing Survey fell to -14.4 in March from the previous reading of -11.3. The US PCE report on Friday will be in the spotlight. The headline PCE is estimated to show an increase of 0.4% MoM, while the Core CPE is projected to rise by 0.3% MoM. 

The US Federal Reserve (Fed) policymakers indicated that they will be in a position to cut interest rates when they have confidence that inflation is progressing towards the 2.0% target. Investors anticipate the incoming data to rule out a May rate cut, and the first rate cut is likely to happen in the June meeting. According to CME Group's FedWatch tool, Federal Funds Futures have priced in 74.5% odds that the Fed will cut rates in June.

On the other hand, New Zealand’s economy entered a technical recession in the final quarter of 2024, driven by weak consumer spending and wholesale trade. This, in turn, weighs on the New Zealand Dollar (NZD) and creates a headwind for the NZD/USD pair. Additionally, the weaker-than-expected GDP growth numbers might convince the Reserve Bank of New Zealand (RBNZ) to cut the official cash rate (OCR) sooner than expected. 

Moving on, US Consumer Confidence by the Conference Board, Durable Goods Orders, and the FHFA’s House Price Index will be due. On Wednesday, the New Zealand ANZ Business Confidence will be published. On Friday, the US PCE report will be a closely watched event.