CFD Trading Rate New Zealand Dollar vs US Dollar (NZDUSD)

• NZD/USD trades in negative territory for the third consecutive day around 0.6147 on Wednesday.
• US CPI was stronger than expected, rising 0.04% MoM in February vs. 0.3% prior.
• The lack of clarity about any supporting measures from the Chinese authorities drags the Kiwi lower against the USD.

The NZD/USD pair hovers around the mid-0.6100s during the early Asian session on Wednesday. The rebound of the US Dollar (USD) and higher US Treasury bond yield exert some selling pressure on the pair. The pair remains at the mercy of the USD price dynamics and the broader risk sentiment amid the quiet day in terms of economic data on Wednesday. At press time, NZD/USD is trading at 0.6147, down 0.06% on the day.

Inflation in the United States climbed above 3% in February, keeping the Federal Reserve (Fed) on course to wait at least until the summer before starting to lower interest rates. The US Consumer Price Index (CPI) data for February came in stronger than expected, rising 0.04% MoM from 0.3% in January. The Core CPI arrived at 0.4% MoM and 3.8% YoY in February. The upbeat inflation data might convince the Fed to focus on more data and allow policymakers to avoid having to rush to cut rates. This, in turn, boosts the Greenback and weighs on the NZD/USD pair.

On the other hand, the lack of clarity about any supporting measures to restore China's struggling property markets remained a headwind for the China-proxy New Zealand Dollar (NZD). The market sentiment has worsened since Moody’s downgraded investment grade rating for Vanke, China’s state-backed developer.

Market participants will focus on US February Retail Sales, due on Thursday. The figure is estimated to improve to a 0.8% MoM rise from a 0.8% fall in January. Investors will take cues from the data and find trading opportunities around the NZD/USD pair.

• NZD/USD regains positive traction on Tuesday and is supported by subdued USD demand.
• Bets for a June Fed rate cut and a positive risk tone keeps the USD bulls on the defensive.
• Traders, however, seem reluctant and look to the key US CPI report for a fresh impetus.

The NZD/USD pair attracts some dip-buying during the Asian session on Tuesday, albeit lacks follow-through and remains confined within the previous day's range. Spot prices currently trade around the 0.6170-0.6175 zone and for now, seem to have stalled the recent pullback from the highest level since February 22 touched last week.

The US Dollar (USD) continues with its struggle to attract any meaningful buyers or build on its recovery from a nearly two-month low touched in reaction to mixed US jobs report on Friday amid bets for a shift in the Federal Reserve's (Fed) policy stance. In fact, the markets are now pricing in a greater chance that the US central bank will start cutting interest rates in June, which is reinforced by a further decline in the US Treasury bond yields. This, in turn, keeps the USD bulls on the defensive and lends some support to the NZD/USD pair.

Apart from this, a positive tone around the US equity futures is seen as another factor undermining the safe-haven Greenback and further benefitting the risk-sensitive Kiwi. Traders, however, seem reluctant to place aggressive directional bets and prefer to wait for the release of the latest US consumer inflation figures. The crucial US CPI report will play a key role in influencing market expectations about the Fed's rate cut path and drive the USD demand. This, in turn, warrants some caution before positioning for any further appreciating move for the NZD/USD pair.

Investors this week will also confront the release of the Food Price Index from New Zealand on Wednesday, which will be followed by the US monthly Retail Sales figures and the Producer Price Index (PPI) on Thursday. This could further provide some meaningful impetus to the NZD/USD pair and possibly determine the next leg of a directional move.

• NZD/USD trades on a softer note near 0.6169 amid the modest rebound of USD on Tuesday.
• Financial markets have priced in nearly 70% odds of a rate cut from the Fed in June.
• The RBNZ softened its hawkish tone amid signs of easing inflation pressures.
• The US February CPI inflation data will be in the spotlight on Tuesday.

The NZD/USD pair trades with a mild negative bias above the mid-0.6100s during the early Asian session on Tuesday. The modest recovery of the US Dollar (USD) weighs on the pair. Investors will closely watch US Consumer Price Index (CPI) inflation data for February, due later in the day. At press time, NZD/USD is trading at 0.6169, down 0.01% on the day.

The US February CPI data will be the highlight on Tuesday as investors will observe the degree of inflation persistence. The headline CPI figure is expected to remain steady at 3.1% YoY, while the Core CPI figure is estimated to ease to 3.7% YoY in February. The rising inflation is likely to delay the Federal Reserve’s (Fed) decision to lower the interest rate. This, in turn, might lift the Greenback and cap the upside of the NZD/USD pair.

On the other hand, if inflation eases as expected, it could convince the Fed to cut the fed funds rate in its June meeting, which might drag the USD lower against its rivals. According to the CME Group’s Fedwatch Tool, the expectations for a rate cut of at least 25 basis points (bps) at the June meeting are currently above 70%.

On the Kiwi front, the Reserve Bank of New Zealand (RBNZ) kept the Official Cash Rate (OCR) unchanged at 5.5% at its February meeting. However, the central bank softened its hawkish tone amid signs of easing inflation pressures. The RBNZ statement stated that core inflation and most measures of inflation expectations have declined, and the risks to the inflation outlook have become more balanced.

Moving on, market participants will watch the US February CPI data on Tuesday. Later this week, New Zealand’s Food Price Index will be due on Wednesday, and US Retail Sales will be released on Thursday. Traders will take cues from these events and find trading opportunities around the NZD/USD pair.

• NZD/USD rotates after touching the top of a month-long range on Friday. 
• The MACD has given a sell signal at the same time, indicating the chance of a move lower.
• A move down to the floor of the range is possible subject to fundamentals.  

The New Zealand Dollar trades flat against the US Dollar on Monday, after touching the top of a multi-week range, as traders bide their time ahead of the release of US Consumer Price Index (CPI) data on Tuesday. 

The release could impact expectations of when the Federal Reserve (Fed) is expected to cut interest rates. Since lower interest rates or the expectation of lower rates is negative, the data is likely to impact US Dollar pairs, including NZD/USD. 

NZD/USD rotates after touching range ceiling 

The NZD/USD pair rose up to a peak of 0.6218 on Friday hitting the top of a range that unfolded during February. The price then withdrew and fell back down as technical traders shorted the pair, forming a bearish Shooting Star Japanese candlestick pattern on the 4-hour chart (circled). 

New Zealand Dollar vs US Dollar: 4-hour chart

The combination of the Shooting Star with the range high – a formidable resistance ceiling – suggests a possibility the short-term trend could be changing, and the pair will start to descend back down towards the range lows at around 0.6090 – subject to fundamental developments. 

The Moving Average Convergence/ Divergence (MACD) indicator has just crossed below its signal line whilst in positive territory, giving a sell-signal and adding credence to the bearish outlook. 

The MACD is a particularly useful indicator for timing the turns in a sideways market such as this, as can be seen from the chart where the crosses in the MACD closely synchronize with the turning points in the price as it oscillates within the range.  

A breakout above the range high and the high of the Shooting Star would suggest the market was going higher, however, and possibly breaking out of the range, in which case it would expected to run higher to a target at 0.6309, the 61.8% Fibonacci extrapolation of the range higher.

• NZD/USD weakens near 0.6172 despite the softer USD in Monday’s Asian session. 
• The mixed US February labour market data and dovish remarks from Fed’s Powell triggered the expectation for rate cuts in June. 
• The upbeat China’s CPI inflation data lifts the Kiwi against the USD. 
• The highlight of this week will be the US February CPI, due on Tuesday.

The NZD/USD pair remains capped under the 0.6200 barrier during the Asian session on Monday. The downtick of the pair might be limited as the US Dollar (USD) is likely to remain on its back foot after the dovish comments from Federal Reserve (Fed) Chair Jerome Powell and the mixed jobs data last week. At press time, NZD/USD is trading at 0.6172, down 0.03% on the day. 

Last week, Fed’s Powell suggested that the path for easing policy may not be far off as the US central bank isn’t far from getting the evidence needed to be confident inflation is returning sustainably to the 2% target. The dovish remarks from Powell triggered the expectation for rate cuts in June, with the market now pricing in 100 basis points (bps) of total easing this year. This, in turn, exerts some selling pressure on the Greenback and acts as a tailwind for the NZD/USD pair. 

On the other hand, the signal of an upward trend in China's main gauge of inflation provides some support to the China-proxy New Zealand Dollar (NZD). The Chinese Consumer Price Index (CPI) rose by 0.7% YoY in February from a 0.8% fall in January, stronger than the estimation of a 0.3% rise. 

The US February CPI will be due on Tuesday. The headline CPI figure is expected to remain steady at 3.1% YoY, while the Core CPI is estimated to ease to 3.7% YoY. Additionally, US Retail Sales will be reported on Thursday, which is projected to improve to 0.7%. The better-than-expected data might lift the USD and cap the upside of the NZD/USD pair. 

• NZD/USD gains ground near 0.6175 in Friday’s early Asian session. 
• US weekly Initial Jobless Claims last week came in at 217K, worse than expected. 
• RBNZ’s Conway said it might cut interest rates sooner than expected if the Fed begins easing later this year.
• The US February Nonfarm Payrolls (NFP) will be in the spotlight on Friday. 

The NZD/USD pair gains momentum above the mid-0.6100s during the early Asian session on Friday. The uptick of the pair is supported by the sell-off of the US Dollar Index (DXY) below the 103.00 mark for the first time since early February. Investors will closely monitor the highly-anticipated US Nonfarm Payrolls (NFP) due on Friday. This event could trigger volatility in the market. At press time, NZD/USD is trading at 0.6175, up 0.01% on the day.

On Thursday, the US weekly Initial Jobless Claims for the week ended March 2 held at a seasonally adjusted 217,000, worse than the market expectation of 215,000 in the previous week. Meanwhile,  Continuing Claims rose by 8,000 to 1.906M in the week ended February 24 from 1.899M prior. 

The strong labor market and hot inflation data since the beginning of the year have lowered the likelihood that the Federal Reserve (Fed) will lower interest rates in May. Fed Chair Jerome Powell said to the Senate Banking Committee on Wednesday that he thought the interest rate in the US had reached its peak and would be cut later this year.

The Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged at 5.5% at its February meeting and stated that it will keep monetary conditions tight in the near term to further bring down inflation. RBNZ Chief Economist Conway said on Wednesday that the Fed rate cuts could drive up the New Zealand Dollar (NZD) and reduce inflationary pressure. Conway added that the RBNZ might cut interest rates sooner than expected if the Fed begins easing later this year.

Looking ahead, the US February labor market report will be due on Friday, including Nonfarm-Payrolls, Unemployment Rate, and Average Hourly Earnings. The NFP figure is estimated to see 200,000 jobs added to the US economy, while the unemployment rate is expected to hold steady at 3.7%. 

• NZD/USD extends gains on risk appetite after Fed Powell commented on rate cuts.
• CME FedWatch Tool indicates a 55.8% probability of a 25 bps rate cut in June.
• New Zealand Dollar might have received support from upbeat Chinese Trade data.

NZD/USD continues to advance for a second consecutive session on Thursday, largely driven by weakness in the US dollar (USD) amid improved risk appetite. The pair clings to near 0.6150 during the early European session on Thursday.

Federal Reserve (Fed) Chair Jerome Powell indicated that the central bank could initiate rate cuts at some point in 2024 during his testimony before the House Financial Services Committee. However, Powell stated that the Federal Open Market Committee (FOMC) does not anticipate it being suitable to lower the target range until it has attained a higher level of assurance that inflation is consistently progressing towards the 2% target.

The US Dollar Index (DXY) loses ground for the fifth successive session despite stable US Treasury yields. The DXY trades lower to near 103.23 with 2-year and 10-year yields on US bond coupons standing at 4.56% and 4.11%, respectively. CME FedWatch Tool suggests a 5.0% probability of a 25 basis points rate cut in March, while the likelihood of cuts in May and June stands at 19.3% and 55.8%, respectively.

The antipodean currency New Zealand Dollar (NZD) could have cheered the positive bias surrounding the Chinese economy, highlighted by the Trade Balance data. China's Trade Balance for February surged to $125.16 billion, surpassing expectations of $103.7 billion and the previous figure of $75.34 billion. Additionally, year-on-year imports and exports increased by 3.5% and 7.1%, respectively.

Paul Conway, the chief economist at the Reserve Bank of New Zealand (RBNZ), hinted that the central bank could move to cut interest rates sooner than previously expected should the US Federal Reserve opt for monetary easing later in the year. However, RBNZ Governor Adrian Orr's recent affirmation of the central bank's intention to commence policy normalization in 2025. Orr cited persistent inflationary pressures as grounds for maintaining a restrictive monetary policy stance in the near term.

• NZD/USD posts modest gains near 0.6130 in Thursday’s early Asian session. 
• Fed’s Powell said he expects rate cuts later this year, but the number of cuts will depend on the economy. 
• RBNZ’s Conway said it might begin to cut rates sooner than expected if the Fed starts easing later this year.

The NZD/USD pair trades with a mild positive bias below the mid-0.6100s during the early Asian session on Thursday. The softer US Dollar (USD) to multi-week lows after Chair Powell’s first testimony provides some support to the NZD/USD pair. At press time, the pair is trading at 0.6130, gaining 0.02% on the day. 

The US ADP private sector employment rose 140K in February from 111K in January, below the market expectation of 150K. Meanwhile, January JOLTS job openings dropped to 8.863M versus 9.026 prior, below the consensus of 8.900M. Investors expect the US Nonfarm Payrolls (NFP) to rise by 200K in February from the previous reading of 353K.

On Wednesday, Federal Reserve (Fed) Chair Jerome Powell said during three hours of testimony that interest rate cuts are likely at some point in 2024, but is not yet ready to say when. Powell noted that the central bank thinks it’s not appropriate to cut the rate until they have confidence that inflation is moving sustainably toward 2%. The rising prospects of a rate cut by the Fed in June drag the Greenback lower and create a tailwind for NZD/USD. 

The Reserve Bank of New Zealand (RBNZ) chief economist Paul Conway said the central bank might begin to cut interest rates sooner than it expects if the US Fed starts easing later this year. Conway further stated that Fed rate cuts could boost the New Zealand Dollar (NZD), which reduces inflationary pressures.

Moving on, traders will keep an eye on the Chinese Trade Balance data for February. Later in the day, the US weekly Initial Jobless Claims, the second testimony by Chair Powell, and Balance Trade figures will be due. Also, the Fed’s L. Mester is set to speak.

• NZD/USD treads water below the psychological level of 0.6100.
• The nine-day EMA at 0.6110 appears to be a key barrier, followed by the 23.6% Fibonacci retracement level at 0.6124.
• A break below the major support of 0.6050 level could lead to a revisiting of February’s low at 0.6037.

NZD/USD has recovered intraday losses and strives to move into positive territory, trading around 0.6090 during the Asian session on Wednesday. It is situated just below the immediate resistance level at the psychological barrier of 0.6100.

A decisive move above the latter could provide upward momentum for the NZD/USD pair, potentially testing key resistance levels. The first barrier lies at the nine-day Exponential Moving Average (EMA) of 0.6110, followed by the 23.6% Fibonacci retracement level at 0.6124. These levels will be closely monitored by traders for potential bullish signals.

The NZD/USD pair faces further resistance barriers as it seeks to climb higher, with key levels anticipated at 0.6150, followed by the psychological threshold of 0.6200 and February’s peak at 0.6219.

However, technical analysis using the Moving Average Convergence Divergence (MACD) suggests a prevailing downward sentiment for the NZD/USD pair. The MACD line is positioned below both the centerline and the signal line, indicating a bearish trend. Additionally, the 14-day Relative Strength Index (RSI) is below the 50 level, further confirming the bearish sentiment.

In the event of a downside movement, significant support levels for the NZD/USD pair are expected at the major support level of 0.6050, followed by February’s low at 0.6037. A breach below these levels could intensify downward pressure, potentially leading the pair toward the support region near the psychological level of 0.6000. Traders will closely monitor these levels for potential shifts in market sentiment.

NZD/USD: Daily Chart

• NZD/USD holds positive ground around 0.6085 in Wednesday's early Asian session. 
• The US February ISM Services PMI fell to 52.6 vs. 53.4 prior, weaker than expected.
• RBNZ remains alert for further inflation shocks and wants to see it back at the 2% target before lowering rate. 

The NZD/USD pair posts modest gains below the 0.6100 psychological mark during the early Asian session on Wednesday. The decline of the US Dollar (USD) and Treasury bond yields after the softer ISM services data provides some support to the pair. Investors shift their focus to Chair Jerome Powell’s first testimony, followed by the ADP report, due later on Wednesday. At press time, NZD/USD is trading at 0.6085, gaining 0.02% on the day. 

On Tuesday, the US February ISM Services PMI fell to 52.6 from 53.4 in January, weaker than the estimation of 53.0. The New Orders Index rose to 56.1 from the previous reading of 55.0. The Employment Index dropped to 48.0 versus 50.5 prior, and the Prices Paid Index declined to 58.6 from 64.0 in the previous reading. 

Federal Reserve (Fed) Chair Powell’s testimony to the Senate Banking Committee on Wednesday will take center stage. Investors believe that Fed Chair Powell will err hawkish and emphasize the need for more data to be confident in cutting interest rates. The hawkish remarks from Fed officials might lift the Greenback and weigh on the NZD/USD pair. 

On the Kiwi front, Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said on Wednesday that the falls in inflation are encouraging and interest rates will need to stay restrictive for a sustained period of time. Last week, the RBNZ decided to leave the policy rate unchanged at 5.50% for the fifth meeting in a row. Governor Adrian Orr reiterated during the press conference that the central bank was concerned about underlying inflation and how growing inflation is easing. He further stated that the Official Cash Rate (OCR) needed to stay in the restrictive zone for a “sustained” period to ensure inflation returned to the 1-3% target.

Markey players will focus on Fed Chair Powell’s testimony, ADP report, and JOLTS Job Openings on Wednesday. On Friday, the US labor market data will be released, including US Nonfarm Payrolls (NFP), Average Hourly Earnings, and Unemployment Rate.

• NZD/USD finds an interim support near 0.6070, downside remains favored on dismal market mood.
• Fed Powell might maintain a hawkish rhetoric in his testimony before Congress on Wednesday.
• China’s ambitious growth target fails to uplift the New Zealand Dollar’s appeal.

The NZD/USD pair finds some buying interest after a sell-off to near 0.6070 in the European session on Tuesday. The Kiwi asset is expected to remain on the tenterhooks as investors await the Federal Reserve (Fed) Chair Jerome Powell’s testimony before Congress, scheduled for Wednesday and Thursday.

Fed Powell is expected to maintain a hawkish rhetoric amid absence of evidence that could signal a significant progress in inflation declining towards the 2% target.

The market sentiment remains cautious ahead of the Fed Powell’s testimony. S&P 500 futures have generated significant losses in the London session. The US Dollar Index (DXY) is slightly up 0.03% at 103.85.

Meanwhile, Chinese Premier Li Qiang’s ambitious 5% Gross Domestic Product (GDP) target for 2024 has failed to uplift demand for the New Zealand Dollar. The New Zealand economy is one of China's major trading partners, and improving Chinese economic prospects generally results in a positive development for the Kiwi Dollar.

NZD/USD declines toward the horizontal support of the Descending Triangle pattern on a four-hour timeframe, placed from January 23 low at 0.6062. The downward-sloping border of the aforementioned chart pattern is plotted from December 25 high at 0.6410.  

Usually, a Descending Triangle pattern exhibits indecisiveness among market participants but with a slight downside bias due to lower highs and flat lows.

The asset remains below the 50-period Exponential Moving Average (EMA) near 0.6118, indicating uncertainty for near-term demand.

The 14-period Relative Strength Index (RSI) falls into the bearish range of 20.00-40.00 range after failing to shift in the 40.00-60.00 region. This indicates a “sell on rise” behavior of market participants.

Going forward, a downside move below February 13 low near 0.6050would expose the asset to the psychological support of 0.6000, followed by November 9 high at 0.5956.

On the flip side, an upside move would emerge if the asset will break above the round-level resistance of 0.6200, which will drive the asset towards February 22 high at 0.6220, followed by January 11 high at 0.6260.

NZD/USD four-hour chart

• NZD/USD faces struggles as traders adopt cautious stance before US key data.
• Fed’s Powell will testify before the US Congress regarding the Semi-Annual Monetary Policy Report on both Wednesday and Thursday.
• Chinese Services PMI fell to 52.5 in February from 52.7 prior.
• New Zealand Commodity Prices rose by 3.5% in February, against the previous rise of 2.1%.

NZD/USD trims some of its intraday losses as the NZX 50 Index recovers its daily losses on Monday. The NZD/USD pair hovers around 0.6090 during the Asian session on Tuesday. The pair faces downward pressure on risk-off sentiment ahead of key US economic data this week, including the ISM Services PMI data, ADP Employment Change, and Nonfarm Payrolls for February.

Traders are also keenly awaiting insights into the Federal Reserve's (Fed) stance and forthcoming policy decisions. Fed Chairman Jerome Powell is scheduled to testify before the US Congress' House Financial Services Committee regarding the Fed's Semi-Annual Monetary Policy Report on both Wednesday and Thursday. As per the CME FedWatch Tool, there is a 3.0% probability of a 25 basis points rate cut in March, with the likelihood of cuts in May and June standing at 21.8% and 50.9%, respectively.

ANZ Commodity Prices, released by National Bank ANZ, increased by 3.5% in February, following January's increase of 2.1%. New Zealand's Manufacturing Sales for the fourth quarter is anticipated to be released on Thursday.

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr reiterated the central bank's plan to begin policy normalization in 2025, citing elevated inflation as a reason to maintain restrictive monetary policy for the foreseeable future.

Moreover, China aims for approximately 5% GDP growth in 2024 by prioritizing job creation and risk management. Chinese authorities stress the importance of sustaining proactive fiscal policies and prudent monetary measures. This target could potentially bolster the New Zealand Dollar (NZD), given the close business ties between the two countries, consequently supporting the NZD/USD pair. Additionally, Chinese Services PMI contracted to 52.5 in February from 52.7 in the previous period.

• NZD/USD posts modest gains around 0.6095 in Tuesday’s early Asian session. 
• Fed’s Bostic said the Fed is under no urgent pressure to cut interest rates given a strong economy. 
• China will deliver a top annual political event, which might ease the fear about the fate of the Chinese economy.

The NZD/USD pair remains capped under the 0.6100 mark during the early Asian session on Tuesday. Financial markets will be cautious this week as they await economic data and policy guidance. The US February ISM Services PMI will be due later in the day. The pair currently trades near 0.6095, up 0.02% on the day. 

Atlanta Fed President Raphael Bostic said that the Federal Reserve (Fed) is under no urgent pressure to cut interest rates given a strong economy and job market. Bostic further stated that it will likely be appropriate for the Fed to approve two quarter-point rate cuts by the end of this year. San Francisco Fed President Mary Daly said central bank officials are ready to lower interest rates as needed but emphasized there's no urgent need to cut given the strength of the economy. 

Investors will take more cues from Fed's Chair Jerome Powell's testimony on Wednesday, which might offer some hints about a broad overview of the economy and monetary policy. The hawkish remarks might lift the US Dollar (USD) and act as a headwind for the NZD/USD pair. 

China’s economy has been roiled by a property sector crisis, raising concern about the health of the second-largest economy in the world. Market players will monitor the National People's Congress to see what's on offer when it starts on Tuesday. The development surrounding the stimulus plan from Chinese authorities could boost the China-proxy New Zealand Dollar (NZD) and cap the downside of the NZD/USD pair. 

Looking ahead, the US ISM Services PMI will be due on Tuesday, along with the final S&P Global Services PMI, Factory Orders, and the RCM/TIPP Economic Optimism Index. Additionally, the Fed’s M. Barr is set to speak. These events could give a clear direction to the NZD/USD pair. 

• NZD/USD loses ground amid a stable US Dollar on Monday.
• New Zealand Terms of Trade Index (Q4) indicated a trade deficit of 7.8% against the expected 0.2% deficit.
• CME FedWatch Tool suggested Fed rate cut probability in March stands at 5.0%, with May and June estimated at 26.8% and 53.8%, respectively.

NZD/USD retraces recent gains, lowering down to near 0.6100 during the Asian session on Monday. The Terms of Trade Index released by Statistics New Zealand, a measure of the balance amount between imports and exports, indicated a trade deficit of 7.8% for the fourth quarter of 2023, which was higher than market expectations of a 0.2% deficit. The previous reading was a 0.6% decrease in the third quarter.

On Friday, ANZ – Roy Morgan Consumer Confidence (Jan) showed an improvement of 0.9 to 94.5 from 93.6. However, the New Zealand Dollar (NZD) had gained ground previously due to comments from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr, who mentioned that the central bank anticipates starting policy normalization in 2025. Due to elevated inflation, Orr highlighted the necessity for monetary policy to remain restrictive for the time being.

The US Dollar Index (DXY) faced downward pressure primarily due to a contraction in the United States (US) manufacturing sector observed in February. The US ISM Manufacturing PMI dropped to 47.8 in February, from the previous reading of 49.1. The index has surprisingly missed the market expectation of 49.5. Additionally, the US Michigan Consumer Sentiment Index declined to 76.9 in February, falling below the market expectation of remaining unchanged at 79.6.

Atlanta Fed President Raphael W. Bostic has expressed his expectation that the first cut in interest rates would likely be appropriate, possibly occurring towards the end of this year at the earliest, which provides some support for the US Dollar (USD). According to the CME FedWatch Tool, the probability of Fed rate cuts in March stands at 5.0%, while the likelihood of cuts in May and June is estimated at 26.8% and 53.8%, respectively.

Investors will likely monitor closely upcoming economic data releases, including the ISM Services PMI data, ADP Employment Change, and Nonfarm Payrolls for February. Moreover, the focus will be on the speech of Federal Reserve Chair Jerome Powell on Wednesday and Thursday for further insights into the central bank's monetary policy stance.

NZD/USD consolidates after the recent decline post-RBNZ meeting. Economists at OCBC Bank analyze the pair’s outlook.

Some unwinding of Kiwi longs may still be underway

• NZD/USD positions below 0.6100 after recovering intraday losses.
• The pair could find the immediate resistance zone around the 23.6% Fibonacci retracement level of 0.6124 and the nine-day EMA at 0.6127.
• Technical analysis indicates a confirmation of the bearish sentiment.

NZD/USD moves sideways with a bias to continue its losing streak that began on February 23. The pair hovers around 0.6090 during the European session on Friday, positioned just below the immediate resistance of the psychological level at 0.6100.

A breakthrough above the latter could exert upward support for the NZD/USD pair to explore the resistance zone around the 23.6% Fibonacci retracement level of 0.6124, in conjunction with the nine-day Exponential Moving Average (EMA) at 0.6127.

Further resistance barriers are anticipated around the major level of 0.6150, followed by the psychological level of 0.6200 and February’s high at 0.6219.

Based on the technical analysis of the Moving Average Convergence Divergence (MACD), the NZD/USD pair appears to exhibit a downward sentiment. The MACD line is positioned below both the centerline and the signal line, indicating a bearish trend. Furthermore, the 14-day Relative Strength Index (RSI) is below the 50 level, suggesting a confirmation of the bearish sentiment.

On the downside, the NZD/USD pair could find key support at the major support level of 0.6050 followed by February’s low at 0.6037. A break below this level could prompt the pair to navigate the support region around the psychological level of 0.6000.

NZD/USD: Daily Chart

• NZD/USD snaps its losing streak on hawkish remarks from RBNZ Governor Adrian Orr.
• Governor Orr noted that while inflation remains elevated, it is trending downward.
• Market expectations for the Fed’s first-rate cut have been pushed back due to recent US data.

NZD/USD broke its four-day losing streak following comments from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr on Friday. Orr stated that the central bank anticipates commencing policy normalization in 2025. As a result, the pair climb higher, reaching near 0.6090 during the Asian session.

Governor Orr mentioned that the economy is progressing as expected, with inflation expectations decreasing. While inflation remains elevated, it is on a downward trend. Orr emphasized the need for monetary policy to remain restrictive for some time. He also expressed expectations for economic growth to pick up in 2024.

The US Dollar Index (DXY) is slightly lower, hovering near 104.10, despite the improved US Treasury bond yields, which stand at 4.63% for the 2-year and 4.25% for the 10-year bonds at the time of publication. However, market expectations for the Federal Reserve's first-rate cut have been pushed back due to recent Gross Domestic Product (GDP) data from the United States (US), providing support for the US Dollar (USD).

The Greenback gained ground following the release of the Federal Reserve's preferred inflation gauge, the US Personal Consumption Expenditures - Price Index, which met expectations. Investors are now focusing on the final US S&P Global Manufacturing PMI for February, scheduled for release on Friday.

The US Personal Consumption Expenditure (PCE) Price Index expanded by 2.4% year-over-year (YoY) in January, down from the previous reading of 2.6%, aligning with market expectations. On a month-over-month basis, the index increased by 0.3%, compared to a 0.1% increase in the prior period.

Meanwhile, the US Core PCE, the Federal Reserve's preferred inflation measure, grew by 2.8% YoY, slightly lower than December's 2.9%, in line with consensus estimates. On a monthly basis, the core PCE rose by 0.4%, surpassing the previous 0.1% increase.

• The NZD/USD traded at around 0.6085 with 0.25% losses in Thursday's session.
• US inflation rate, gauged by the Core PCE Price Index fell in January, matching expectations.
• Following RBNZ’s dovish hold, if the market keeps delaying rate cuts of the Fed, more downside may be incoming.

The NZD/USD pair is currently trading at 0.6085, reflecting a 0.25% decline in Thursday’s session. Data-wise, US Personal Consumption Expenditures (PCE) showed no surprises, but markets are aligning with the Federal Reserve’s (Fed) forecast of 75 bps of easing in 2024, which is benefiting the USD.

On Thursday, the US Bureau of Economic Analysis reported that the annual inflation rate in the US, measured by the change in the Personal Consumption Expenditures (PCE) Price Index, rose by 2.4% in January, decelerating from 2.6% in December, which was in line with what markets had anticipated. The index experienced a monthly uptick of 0.3%, exactly as expected. When excluding the fluctuating sectors of food and energy, the Core PCE Price Index rose by 2.8% year-over-year, aligning with the consensus.

Regarding expectations, markets seem to have given up the hopes of a cut from the Fed in March or May and instead pushed the start of the easing cycle in June, which seems to be pushing the pair down.

NZD/USD technical analysis

On the daily chart, the Relative Strength Index (RSI) on the NZD/USD shows an overall declining trend, transitioning from the positive territory to the negative territory. This indicates a shift from bullish to bearish momentum, demonstrating a power change from buyers to sellers. This is also supported by the decreasing green bars in the Moving Average Convergence Divergence (MACD) histogram, suggesting a deceleration in positive momentum.

In terms of the broader trend, despite the pair trading below the 20 and 100-day Simple Moving Averages (SMAs), it remains above the 200-day SMA. This indicates that while there is short-term bearish pressure, the long-term uptrend hasn't been completely overruled.

• NZD/USD stages a modest recovery from over a one-week low amid some USD selling.
• The technical setup warrants some caution before positioning for any meaningful gains.
• Acceptance below the 100-day SMA is needed to confirm the near-term negative outlook.

The NZD/USD pair attracts some buying during the Asian session on Thursday and reverses a part of the previous day's heavy losses to a one-and-half-week low touched in the aftermath of the Reserve Bank of New Zealand (RBNZ) policy decision. Spot prices currently trade around the 0.6100 mark, albeit lack follow-through as traders keenly await the release of the US Personal Consumption Expenditures (PCE) Price Index before placing fresh directional bets.

Heading into the key data risk, the US Dollar (USD) bulls seem reluctant to place aggressive bets and opt to wait on the sidelines, which, in turn, is seen lending some support to the NZD/USD pair. That said, the Federal Reserve's (Fed) higher-for-longer rates narrative should help limit any meaningful USD downfall. Apart from this, a generally weaker tone around the equity markets could benefit the Greenback's relative safe-haven status and cap the risk-sensitive Kiwi.

From a technical perspective, the post-RBNZ slump showed some resilience below the 100-day Simple Moving Average (SMA) and stalled just ahead of the 200-day SMA. The latter is currently pegged near the 0.6080-0.6075 region and should act as a key pivotal point. Given that oscillators on the daily chart have just started gaining negative traction, a convincing break below the said support will be seen as a fresh trigger for bearish traders and pave the way for deeper losses.

The subsequent downfall has the potential to drag the NZD/USD pair back towards the YTD low, around the 0.6040-0.6035 region touched earlier this February, en route to the 0.6000 psychological mark. The next relevant support is pegged near the 0.5965 area before spot prices weaken further below the 0.5940-0.5935 intermediate support, towards testing sub-0.5900 levels for the first time since November 2023.

On the flip side, any further recovery is more likely to attract fresh sellers and remain capped near the 0.6140-0.6145 horizontal resistance. That said, a sustained strength beyond could trigger a short-covering rally and allow the NZD/USD pair to reclaim the 0.6200 round-figure mark. This is followed by the monthly peak, around the 0.6215-0.6220 region touched last week, which if cleared decisively will shift the near-term bias back in favour of bullish traders.

NZD/USD daily chart