NZD/USD Price Forecast: Strengthens above 0.5950, with bullish technical backdrop

The New Zealand Dollar (NZD) made gains against the US Dollar (USD) during early European trading hours on Friday, pushing the pair above 0.5950. This upward movement was driven by a hawkish tone from New Zealand's Reserve Bank (RBNZ), which indicated potential further interest rate hikes to bring inflation in line with its target range of 1%-3%.

According to a Reuters poll, 90% of economists surveyed expect the RBNZ to raise rates by 25 basis points to 2.75% at its September meeting, with two-thirds anticipating additional hikes throughout the year, potentially reaching 3.0% by December. The RBNZ had already raised the OCR for the first time in over three years last month, signaling more tightening actions aimed at curbing inflation.

Traders are cautious to make significant bets before Federal Reserve Chair Kevin Warsh's speech at Jackson Hole, which could provide further insights into US interest rate movements. However, any hawkish statements from Fed officials might bolster the US currency and limit the upside potential for the NZD in the short term. Analysts note that since the RBNZ's July rate hike, the FX market has reduced its short NZD positions against both the USD and AUD, with the consensus now expecting another rate increase at the upcoming meeting.

Fed's Hammack delivered a hawkish speech, with a 8/10 FXS Speechtracker score, indicating a potential for further tightening. This hawkish sentiment, combined with concerns over public confidence in the 2% inflation goal and the cost of living, suggests that the Dollar could maintain a higher-for-longer stance, supporting the NZD.

In technical analysis, the NZD/USD pair is currently trading above both the 20-day and 100-day simple moving averages, indicating a bullish bias. The 14-day Relative Strength Index (RSI) is around 63, suggesting persistent bullish momentum, though not yet at overbought levels. Support levels are identified at the Bollinger middle band around 0.5910, the 100-day moving average near 0.5845, and the lower Bollinger band at 0.5830.

A daily close above the upper Bollinger band near 0.5990 could signal further upside, while repeated failure there might lead to consolidation or a corrective pause.