The NZD/USD pair continues its downward trend, dropping to 0.6240 in its third consecutive session of declines. This ongoing sell-off in the New Zealand dollar is driven by market expectations of an upcoming interest rate cut by the Reserve Bank of New Zealand (RBNZ). New Zealand's borrowing costs are currently at 5.25% per annum, with widespread anticipation of a 50-basis point reduction at the next RBNZ meeting.
The RBNZ is known for its proactive and flexible monetary policy, which swiftly adjusts to inflationary pressures and external economic indicators. This expected rate cut responds to such factors and aligns with the bank's strategy to manage economic growth and inflation.
Moreover, the NZD has been under additional pressure from a strengthening US dollar, bolstered by unexpectedly robust US employment statistics for September, reported by ADP. Although the ADP report does not directly correlate with the Nonfarm Payrolls (NFP) due shortly, it still shapes market expectations and sentiment.
Global risk appetite has also waned significantly due to escalating geopolitical tensions in the Middle East, further dampening the prospects for growth-sensitive currencies like the NZD.
NZD/USD technical analysis
The NZD/USD pair followed a bearish pattern, confirming a downward wave to 0.6265 and a corrective rise to 0.6313. The market is now forming a new decline towards 0.6210. Once this target is reached, a corrective move to retest 0.6265 from below may occur, potentially leading to further declines towards 0.6144. This bearish NZD/USD outlook is supported by the MACD indicator, which, despite being above zero, shows a strong downward trajectory.
On the hourly chart, the pair is developing the third wave of its decline towards 0.6210. Following this, a corrective fourth wave up to 0.6260 is anticipated. This forecast aligns with the Stochastic oscillator readings, which indicate the signal line is below 50 and heading towards 20, suggesting a continuation of the downward momentum after a brief correction.
Before you enter foreign exchange and stock markets, you have to remember that trading currencies and other investment products is trading in nature and always involves a considerable risk. As a result of various financial fluctuations, you may not only significantly increase your capital, but also lose it completely. Therefore, our clients have to assure RoboForex that they understand all the possible consequences of such risks, they know all the specifics, rules and regulations governing the use of investment products, including corporate events, resulting in the change of underlying assets. Client understands that there are special risks and features that affect prices, exchange rates and investment products.
Recommended Content
Editors’ Picks
GBP/USD extends sell-off to 1.3100 on Bailey's dovish remarks
GBP/USD extends its sell-off to 1.3100 in the European trading hours on Thursday. The pair bears the brunt of the dovish comments from BoE Governor Andrew Bailey, who said that the central bank could become 'more activist' on rate cuts if inflation eases. Mideast concerns-led risk aversion also weighs on the pair.
EUR/USD sits at three-week lows below 1.1050 on USD strength
EUR/USD stays pressured below 1.1050 in the European session on Thursday, testing three-week lows. Sustained US Dollar strength, on fading outsized Fed rate cut bets and Middle East escalation, weighs on the pair. Meanwhile, increased bets for a 50 bps Oct ECB rate cut undermine the Euro.
Gold stuck in a range after collapse of aggressive Fed bets, haven demand underpins
Gold oscillates in a tight range after bets fade that the Fed will continue slashing interest rates aggressively. Support for Gold comes from increasing geopolitical risks and lower interest rates globally.
ISM Services PMI Preview: US services sector expected to expand in September
US ISM Services PMI is seen improving a tad in September. The US services sector is expected to remain within the expansionary territory. Investors continue to favour a soft-landing scenario of the US economy.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.