New Zealand Dollar sinks toward its July low after the Fed hikes
NZD/USD has dropped in six straight sessions. The run started near 0.5900 on September 8, went through both long-run averages near 0.5850 early in the run, and the last three sessions have been the biggest of the lot.
The New Zealand Dollar (NZD) has been on a downward trend for six consecutive sessions, with the most significant decline occurring in recent days. The pair recently traded just above 0.5700 following the Federal Reserve's decision to raise interest rates to 3.75-4.00%. The July low near 0.5625 is the next level that the NZD could reach if the current momentum continues.
The daily momentum gauge stands at 8, the lowest point since July. The Reserve Bank of New Zealand (RBNZ) increased its cash rate to 2.75% on September 2, predicting a pause in October and another rise in December. The Fed's forecasts, however, show a more optimistic US growth outlook for 2023 and 2024, with no further rate cuts expected until 2027.
The New Zealand economy's second-quarter GDP is expected to be released on Wednesday, with a forecast of 0.1% growth on the quarter after 0.8% in the first quarter. This could impact the RBNZ's decision on the December hike, with a weaker-than-expected number pushing it further out. Trade figures will follow on Thursday. Resistance levels are at 0.5750, 0.5800, and the 50-day Exponential Moving Average (EMA) near 0.5850.
Support levels are at 0.5700, the July low just above 0.5600. The current bias is bearish below 0.5750. The daily Stochastic Relative Strength Index (Stoch RSI) stands at 8, which is deep in oversold territory, indicating a potential bounce toward 0.5750. If the NZD closes above 0.5800, the bearish case weakens. New Zealand, known as the "Kiwi" in currency circles, is influenced by the health of the New Zealand economy, the country's central bank policies, and unique factors like China's economic performance and dairy prices.
The RBNZ aims to maintain an inflation rate between 1% and 3% over the medium term, adjusting interest rates accordingly. The rate differential between New Zealand and the US Federal Reserve also plays a crucial role in determining the NZD/USD pair's movement. Macroeconomic data releases in New Zealand are key to assessing the state of the economy and can impact the NZD's valuation.
In risk-on periods, when investors perceive low broader market risks and optimism about growth, the NZD tends to strengthen. Conversely, during market turbulence or economic uncertainty, the NZD tends to weaken.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
