- 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 the United States (US) 2024 presidential election. Meanwhile, some recent polls show former President Donald Trump’s victory over current Vice President Kamala, which may be a factor that supports the recent rally in the Greenback.
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 October 7 high at 0.6173 and the October 4 high near 0.6220.
NZD/USD daily chart
(This story was corrected on October 24 at 13:00 GMT to say that a move above the October 8 high of 0.6146 will drive the NZD/USD towards the October 7 high at 0.6173, not to the 50-day EMA.)
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds steady above 1.0800, looks to post weekly losses
EUR/USD trades marginally higher on the day above 1.0800 after the data from the US showed that Durable Goods Orders declined by 0.8% in September. Nevertheless, the pair remains on track to close the fourth consecutive week in negative territory.
GBP/USD extends recovery to 1.3000 area
GBP/USD extends its recovery and trades at around 1.3000 in the American session on Friday. The US Dollar struggles to gather strength as the market mood remains positive heading into the weekend, allowing the pair to hold its ground.
Gold fluctuates in narrow range below $2,750
Gold stays in a consolidation phase and fluctuates in a relatively tight range below $2,750 on Friday. US Treasury bond yields stabilize in the American session, making it difficult for XAU/USD to gather directional momentum.
Crypto Today: XRP, Bitcoin and Ethereum decline as Ripple files response to SEC appeal
XRP loses over 1.30% as Ripple's executive confirms the filing of an important document in the appeals process in the SEC lawsuit. Bitcoin corrects less than 1% and sustains above $67,500. Ethereum is down nearly 0.20%, holding above the key support level of $2,500.
US elections: The race to the White House tightens
Trump closes in on Harris’s lead in the polls. Neck and neck race spurs market jitters. Outcome still hinges on battleground states.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.