The New Zealand Dollar has nothing left to win

The New Zealand Dollar (NZD) has reached a point of minimal potential upside, according to market analysis. On Monday, the NZD/USD traded just above 0.5900, with little change throughout the session and around seventy pips below its late-August peak that neared 0.6000. The Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) to 2.50% on July 8, its first increase since 2023.

However, with expectations of further hikes, the current hike appears close to fully priced, leaving limited room for additional upward movement. The 50-day and 200-day EMAs intersect near 0.5850, while the 0.5900 handle has held the session low. Four consecutive lower highs have followed the August peak, and the session low has yet to test 0.5950.

The RBNZ's decision to raise rates is not seen as significantly hawkish, as the market already anticipates a series of increases. With the next data points including New Zealand Building Permits, ISM Manufacturing PMI, JOLTS openings, private payrolls, and Nonfarm Payrolls, the NZD will be influenced by the overall economic sentiment from the American session. A close above 0.5950 would invalidate the bearish bias.