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

• NZD/USD gains momentum as investors express optimism regarding the de-escalation of tensions between Israel and Iran.
• The higher US Treasury yields could help in limiting the losses of the US Dollar.
• US GDP Annualized (Q1) is expected to grow at a slower rate in the first quarter.

The NZD/USD pair moves in the positive direction, trading around 0.5940 during the Asian session on Thursday. The risk-sensitive New Zealand Dollar (NZD) gains momentum as risk appetite improves. Investors are optimistic about the resolution of conflicts between Iran and Israel, following a statement by an Iranian official suggesting no immediate plans for retaliation against Israeli airstrikes, as reported by Reuters.

The China Securities Journal reported on Tuesday that the People's Bank of China (PBoC) plans to reduce the Medium-term Lending Facility (MLF) rate to decrease funding costs during the next MLF rate setting scheduled for May 15. Lower MLF rates in China could stimulate economic activity and boost consumer spending, which may lead to increased demand for New Zealand goods and services in the Chinese market.

The US Dollar Index (DXY), which measures the US Dollar (USD) against six major currencies, depreciated following mixed manufacturing data from the United States (US). However, the Greenback's losses were somewhat offset by slight gains in US Treasury yields.

According to the US Department of Commerce's report on Wednesday, US Durable Goods Orders rose 2.6% month-over-month (MoM) in March, surpassing the previous reading of 0.7% and beating the estimated 2.5%. However, core goods, excluding transportation, increased 0.2% MoM, falling short of the expected 0.3%.

On Thursday, the preliminary Gross Domestic Product Annualized (Q1) data for the United States (US) is set to be released, with expectations of a growth rate slowdown. These GDP figures will offer insights into the strength of the US economy and could influence future actions by the Federal Reserve (Fed).

• The daily RSI reveals potential minor correction, indicating latent buying momentum.
• The hourly indicators show fluctuating momentum, indicating a possible pause in the bearish impulse.
• For bulls to make ground, they would need to assert above the 20-day SMAs.

The NZD/USD rose to 0.5937 on Wednesday’s session, presenting subtle gains. Long-term bearish forces maintain overall control of the pair's course. However, there are signals that the bulls may be waking up and as sellers lose traction, it might be the buyer's turn now.

The daily chart Relative Strength Index (RSI) languishes in negative territory. However, an uptick suggests a potential minor correction following many days of depressed readings. The Moving Average Convergence Divergence (MACD) reveals a fresh green bar, signaling that positive momentum is starting to build, albeit the prevailing trend remains bearish.

NZD/USD daily chart

Zooming in, the hourly RSI readings display more fluctuations, swinging between the 40 and 55 marks within Wednesday's timeframe. Furthermore, the hourly MACD shows decreasing red bars, indicating a decline in the pair's downward momentum on this shorter-term chart.

NZD/USD hourly chart

Taking a broader view, the NZD/USD has stayed below its 20, 100, and 200-day Simple Moving Averages (SMAs). This positioning below the SMAs reveals a bearish trend prevailing in short- and long-term frames. Wednesday's rejection of buyers at 0.5960, at the 20-day SMA, reinforces the dominance of sellers in the market and suggests that the downward trend may continue. This situation implies that the current buying momentum isn’t strong enough to be considered a bullish signal. However, the tables would change if the buyers manage to conquer that level in the next sessions.

• NZD/USD extends gains despite the prevailing bearish sentiment for the pair.
• A break below 0.5900 could lead the pair to test the rebound support level of 0.5863.
• A break into the triangle around the level of 0.5963 has the potential to weaken the bearish sentiment.

NZD/USD advances for the third consecutive session on Wednesday, trading around 0.5940 during the European session. The pair is testing the lower boundary of the daily symmetrical triangle around the level of 0.5963. A breach into the triangle could potentially weaken the bearish sentiment.

However, analysis of the lagging indicator Moving Average Convergence Divergence (MACD) suggests a downward trend for the NZD/USD pair. This is indicated by the placement of the MACD line below the centerline and the signal line.

Additionally, the 14-day Relative Strength Index (RSI) remains below the 50 level, further confirming the bearish sentiment. This could prompt NZD/USD to approach the psychological level of 0.5900. A break below this level may lead the pair to test the rebound support region around the levels of 0.5863 and 0.5850.

Alternatively, If the NZD/USD pair breaks into the symmetrical triangle, it might target the psychological barrier of 0.6000. A breakthrough above this level could support the pair's momentum to test the 50-day Exponential Moving Average (EMA) at 0.6023, which aligns with the upper boundary of the triangle around 0.6030.

NZD/USD: Daily Chart

• NZD/USD gains positive traction for the third straight day amid a softer USD.
• Tuesday’s disappointing US PMIs and a positive risk tone undermine the buck.
• Reduced Fed rate cut bets should help limit the USD losses and cap the major.

The NZD/USD pair attracts follow-through buying for the third successive day on Wednesday and climbs to over a one-week high, around mid-0.5900s during the Asian session amid a modest US Dollar (USD) weakness. 

Weaker US PMI prints released on Tuesday indicated that the economic upturn lost momentum at the start of the second quarter. Furthermore, easing geopolitical tensions in the Middle East remains supportive of a generally positive tone around the equity markets and undermines the safe-haven buck, which, in turn, is seen benefitting the risk-sensitive Kiwi. That said, hawkish Federal Reserve (Fed) expectations help limit the downside for the USD and keep a lid on the NZD/USD pair. 

Market participants now seem convinced that the Fed is unlikely to begin its rate-cutting cycle in June and have also scaled back their expectations about the total number of rate cuts in 2024 to less than two, or around 40 basis points. The hawkish outlook, meanwhile, remains supportive of elevated US Treasury bond yields and is likely to act as a tailwind for the Greenback. This, in turn, might hold back traders from placing aggressive bullish bets around the NZD/USD pair and cap the upside.

Investors now look forward to the release of the US Durable Goods Orders for some impetus later during the North American session. The focus, however, will remain glued to the Advance US Q1 GDP print and the US Personal Consumption Expenditures (PCE) Price Index on Thursday and Friday, respectively. This will influence market expectations about the Fed's future policy decisions, which will drive the USD demand and help in determining the near-term trajectory for the NZD/USD pair.

• The RSI of the NZD/USD on the daily chart shows a slight recovery from the buyers.
• The hourly chart presents a more positive picture, with RSI remaining above 50, signaling increasing buying momentum.

The NZD/USD trades rose to 0.5930 in Tuesday’s session, marking a slight increase with gains of 0.17%. The currency pair continues to be guided by a long-term bearish trend. However, there is an attempt to challenge this bearish supremacy by buyers, albeit modest, and hourly indicators suggest that the momentum picked up is still weak.

On the daily chart, the Relative Strength Index (RSI) reveals a slight recovery showing a reading of 43, still within the negative territory, but suggesting a recent shift in bias among traders from negative to possibly a more positive trend. The decreasing red bars of the Moving Average Convergence Divergence (MACD) also support a weakening of the selling traction and a possible shift.

NZD/USD daily chart

The hourly Relative Strength Index (RSI) presents a more upbeat picture, remaining above the 50 level, with a recent peak close to the 70 level. The latest reading stands at 57.75, providing a boost in momentum. Concurrently, the hourly Moving Average Convergence Divergence (MACD) registers decreasing green bars, indicating weak buying traction.

NZD/USD hourly chart

In terms of the broader outlook, the NZD/USD resides in a definitive bearish stance as its latest position stays below the key Simple Moving Averages (SMA), of 20, 100, and 200-days SMA. This positioning suggests that the overall trend leans heavily towards the downside. In addition, positive signals were detected on the hourly and daily chart but those signals were not decisive buying signals as the buying momentum remains weak. Buyers must increase their efforts and reclaim the 20-day SMA to start talking.

• NZD/USD falls to 0.5900 even though the US Dollar remains sideways.
• Investors await the US core PCE Price Index that will influence speculation for Fed rate cuts.
• NZD/USD consolidates in a 0.5850-0.5933 range for almost a week.

The NZD/USD pair drops to near the crucial support of 0.5900 in Tuesday’s European session while attempting to break above the immediate resistance of 0.5930. A sideways performance is anticipated from the Kiwi asset as investors await the United States core Personal Consumption Expenditure Price Index (PCE) data for March, which will be published on Friday.

The inflation data will be keenly watched as it will provide cues about when the Federal Reserve (Fed) could start reducing interest rates. The inflation data will influence the Fed’s guidance on interest rates, which will be provided in next week’s monetary policy meeting in which key borrowing rates are widely expected to remain unchanged in the range of 5.25%-5.50%.

Market sentiment remains cheerful as investors expect that conflicts between Iran and Israel will not widen further. S&P 500 futures have posted significant gains in the London session, portraying higher investors’ risk-appetite. 10-year US Treasury yields hovers near 4.63% with eyes on US core PCE inflation data, which is expected to have grown steadily by 0.3% on a month-on-month basis.

The New Zealand Dollar drops despite improved appeal for risk-sensitive assets. Meanwhile, expectations for the Reserve Bank of New Zealand (RBNZ) reducing interest rates later in November remain firm. The speculation for the RBNZ pivoting interest rate cuts postponed for later this year after the Q1 Consumer Price Index (CPI) grew expectedly by 0.6%.

The NZD/USD pair has moved back and forth between 0.5850 and 0.5933 over the past week, suggesting a sharp volatility contraction. The 20-period Exponential Moving Average (EMA) at 0.5910 remains stuck to spot prices and exhibits indecisiveness among market participants.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a consolidation ahead.

Fresh downside would appear if the asset breaks below April 16 low at 0.5860. This would drag the asset toward 8 September 2023 low at 0.5847, followed by the round-level support of 0.5900

On the flip side, a recovery move above March 18 high at 0.6100 will drive the pair toward March 12 low at 0.6135. A breach of the latter will drive the asset further to February 9 high around 0.6160.

NZD/USD four-hour chart

• NZD/USD remains firmer, possibly reflecting an improved risk appetite following the easing tensions between Israel and Iran.
• The hawkish sentiment surrounding the Fed’s rates trajectory in June could bolster the US Dollar.
• China Securities Journal suggested that the PBoC might lower the MLF rate to decrease funding costs.

The NZD/USD pair moves slightly lower to near 0.5920 during the Asian session on Tuesday. The New Zealand Dollar (NZD) found support from an improved risk appetite, bolstering the NZD/USD pair. This positive shift follows reduced geopolitical tensions in the Middle East, as highlighted by an Iranian official's recent statement indicating no immediate plans for retaliation against Israeli airstrikes, as reported by Reuters.

However, the upside potential for the NZD/USD pair appears to be capped due to a hawkish sentiment surrounding the Federal Reserve's (Fed) interest rate outlook for June. According to the CME FedWatch Tool, the probability of interest rates remaining unchanged in the June meeting has increased to 84.4%, up from the previous week's 78.7%.

Furthermore, comments from Federal Reserve officials suggest a more hawkish stance regarding the trajectory of interest rates in June, potentially strengthening the US Dollar (USD). According to a Bloomberg report, Chicago Fed President Austan Goolsbee stated on Friday that progress on inflation had "stalled," and the Federal Reserve's current restrictive monetary policy is suitable. Additionally, Reuters reported that Atlanta Fed President Raphael Bostic indicated that the US central bank would abstain from cutting interest rates until the end of the year.

On Tuesday, the China Securities Journal suggested the possibility of the People's Bank of China (PBoC) lowering the Medium-term Lending Facility (MLF) rate on May 15 to reduce funding costs. Given the strong trade relationship between China and New Zealand, such a move could potentially impact New Zealand's market and consequently affect the Kiwi Dollar.

Market participants will likely monitor New Zealand's monthly Trade Balance NZD data for March on Wednesday, followed by ANZ-Roy Morgan Consumer Confidence on Friday. In the United States (US), attention will be on the S&P Global Purchasing Managers Index (PMI) on Tuesday, with expectations of improvements in both the manufacturing and services sectors for April.

• Diminishing red bars of the daily MACD imply a potential easing of bearish momentum, signaling an early indication of a bullish turnaround.
• The hourly chart reveals an RSI oscillating in the positive zone, and MACD with green bars, signaling potential short-term positive momentum.

The NZD/USD pair advanced to 0.5920 on Monday, reflecting a gain of 0.47%. Overall, the bearish force remains strong, while the bulls begin to give signs of potential recovery, highlighting the start of a possible bullish reversal.

On the daily chart, the Relative Strength Index (RSI) remains in negative territory, indicating an ongoing bearish momentum. Although there is a minor upward trend, it remains short of breaking into the positive zone. The decreasing red bars of the Moving Average Convergence Divergence (MACD) suggest a slide in negative momentum, indicating possible signs of a potential bullish reversal.

NZD/USD daily chart

On the hourly chart, a similar condition prevails. The RSI has been oscillating in the positive territory for most of the session, but recently recorded a slight downward inclination, signaling a potential pullback. The MACD histogram also shows rising green bars, indicating a surge in positive momentum.

NZD/USD hourly chart

The broader market perspective reveals much regarding the NZD/USD's performance versus its Simple Moving Average (SMA). With the pair being below the 20,100 and 200-day SMA, a long and short-term downward pressure on the currency is evident.

In summary, there is a bearish dominance in the market, reinforced by both the RSI and MACD trends on the daily and hourly charts, as well as the SMA positioning. However, the slight increase in the daily RSI and the diminishing bearish momentum in the MACD could signify the early stages of a market reversal.

• NZD/USD recaptures 0.5900 as the RBNZ is expected to pivot to rate cuts after the Fed.
• The USD Index moves higher as the strong US economic outlook allows the Fed to maintain interest rates higher.
• Fed Bostic expects that conditions for rate cuts won’t be favorable towards the end of the year.

The NZD/USD pair holds onto gains around 0.5900 in Monday’s early American session. The Kiwi asset clings to gains as ebbing risks of widening Middle East conflict has improved demand for Asian currencies.

The market sentiment turns upbeat after Iran said they are not planning any immediate retaliation to the limited attack of Israel on Isfahan. No further escalation in the conflict between Iran and Israel has dented bullions' demand.

The S&P 500 opens on a positive note, exhibiting improved risk appetite among market participants. 10-year US Treasury yields jump to 4.64% as Federal Reserve (Fed) policymakers argue that the current restrictive monetary policy framework is appropriate given strong labor demand and stubbornly higher price pressures.

The US Dollar Index (DXY) jumps to 106.30 as the strong United States economic outlook due to robust consumer spending and tight labor market conditions have made Fed policymakers comfortable with interest rates remaining at their current levels.

Last week, Atlanta Fed President Raphael Bostic said the progress in inflation declining towards the 2% target will be slower than expected, and conditions for rate cuts won’t be favorable for the central bank towards the end of the year. Bostic added he is comfortable being patient and not madly rushing for rate cuts because labor demand is robust and wage growth remains resilient.

European FX is underperforming against the US Dollar due to expectations that the Bank of England (BoE) and the European Central Bank (ECB) will pivot to rate cutes earlier than the Fed. The Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) are expected to reduce interest rates later than the Fed. Traders are pricing in the November meeting when the RBNZ will start lowering borrowing rates, and no rate cuts are expected by the RBA this year.

• NZD/USD maintains gains despite the bearish sentiment indicated by the technical analysis.
• Traders might contemplate short positions if the pair breaks below the support area encompassing 0.5863 and 0.5850.
• A pullback from the level of 0.5863 could lead the pair toward lower boundary of a symmetrical pattern around 0.5933.

NZD/USD snaps its two-day losing streak, trading around 0.5910 during the European session on Monday. The recent break below the symmetrical channel on April 15 on the daily chart denotes a bearish sentiment.

Furthermore, analysis of the lagging indicator Moving Average Convergence Divergence (MACD) suggests a prevailing downward trend for the NZD/USD pair. This is evident from the MACD line's placement below the centerline and the signal line.

Additionally, the 14-day Relative Strength Index (RSI) remains below the 50 level, offering further confirmation of the bearish sentiment. This could prompt traders of the NZD/USD pair to focus on the region around the significant support levels of 0.5863 and 0.5850. Should these levels be breached, traders may consider short positions, potentially driving the pair to test the psychological barrier at 0.5800, followed by the support level of 0.5772.

Alternatively, if the pair rebounds from the support level of 0.5863, it could target the lower boundary of a symmetrical pattern around 0.5933 and the key level of 0.5950. A breakthrough above these levels might encourage traders to adopt long positions, shifting the sentiment towards bullish, with a potential aim to reach the 50-day Exponential Moving Average (EMA) positioned at 0.6030.

A break above the 50-day EMA will strengthen the bullish sentiment and test the upper boundary of the symmetrical pattern around 0.6043. A breakthrough at this level could prompt the traders to go bullish and approach the resistance barrier at 0.6219.

NZD/USD: Daily Chart

• NZD/USD holds positive ground around near 0.5910 on the weaker USD on Monday. 
• The recent New Zealand inflation data prompted speculation that the RBNZ might cut its rate in November.
• Fed’s Goolsbee signaled a longer timeline for interest rate cuts as progress on inflation had “stalled”. 

The NZD/USD pair gains momentum near 0.5910 on Monday during the early Asian session. The recovery of the pair is bolstered by the risk-on sentiment and modest decline of the US dollar (USD). Traders await more evidence of inflation data for cues on the rates path ahead of a policy decision next week. The US Core Personal Consumption Expenditures Price Index (PCE) for March will be due on Friday.

The New Zealand inflation data last week showed that inflation has continued to fall, but remains above the Reserve Bank of New Zealand’s (RBNZ) target range of 1 to 3%. This triggered the expectation that the RBNZ might cut its Official Cash Rate (OCR) from the November meeting and provide some support to the New Zealand Dollar (NZD). 

Furthermore, both Israel and Iran downplayed the possibility of escalating conflicts in the Middle East after Israel's apparently small strike on Iran, per Reuters. This development contributes to improving market sentiment and lifts riskier assets like the Kiwi. 

On the other hand, Chicago Federal Reserve (Fed) President Austan Goolsbee on Friday hinted at a longer timeline for interest rate cuts as progress on inflation had “stalled". Goolsbee further stated that Inflation has significantly dropped from its pandemic-era peak of 9.1%, but remains stubbornly above the Fed’s target. The high-for-longer US rate narrative boosts the Greenback and creates a headwind for the NZD/USD pair.

On Monday, China's Ministry of Commerce implemented a new tariff on US imports. China has imposed a 43.5% tax on imports of propionic acid from the US. This chemical is widely used in a variety of industries, including food, feed, pesticides, and medicinal applications. The NZD/USD pair drifts higher despite the renewed trade war between the US and China. 

 

• The daily RSI for the NZD/USD reveals growing selling pressure, nearing oversold conditions.
• The hourly indicators also remain weak.
• The pair will close a 0.80% losing week.

The NZD/USD pair saw a 0.25% loss on Friday’s sessing and continues exhibiting a significant bearish tendency. Both short-term and long-term outlooks suggest the prevalence of sellers, which may signal that the pair is bound for further downside.

On the daily chart, the Relative Strength Index (RSI) indicates a bearish trend. It lies deep in negative terrain and edged near oversold territory. The escalating red bars on the Moving Average Convergence Divergence (MACD) histogram align with this bearish stance, augmenting this downturn prediction.

NZD/USD daily chart

On the hourly chart, the  RSI also points south standing below 50 while the MACD exhibits dwindling green bars, indicative of reduced buying momentum.

NZD/USD hourly chart

From a wider viewpoint, NZD/USD presently exhibits a clear bearish trend, given its position below the Simple Moving Average (SMA) for 20, 100, and 200-day periods. However, as indicators approach oversold conditions, the pair may stage a corrective rebound which could give the buyers a chance to reclaim the 20-day SMA. In the meantime, movements below these levels would leave the trend bearish.

• NZD/USD bounces back from 0.5860 as the US Dollar edges down.
• Investors see the RBNZ beginning to reduce interest rates from November.
• The Kiwi asset trades inside the Descending Triangle pattern, suggesting indecisiveness among investors.

The NZD/USD pair turns sideways slightly below 0.5900 in Friday’s European session after recovering sharply from the crucial support of 0.5860.

The Kiwi asset rebounds as the appeal for risk-perceived currencies strengthens after economists cautioned about persistent global inflation. This has increased speculation that central banks other than the Federal Reserve (Fed) will also delay their rate-cut plans to avoid inflation getting rebound again. Initially, only the Fed was expected to begin reducing interest rates later this year due to stubbornly higher price pressures and robust labor demand.

Investors see the Reserve Bank of New Zealand (RBNZ) pivoting to rate cuts from November after NZ Q1 inflation data grew in line with estimates. Price pressures rose by 0.6% as estimated, higher than the prior reading of 0.5%.

The US Dollar Index (DXY) falls slightly to 106.10. The near-term outlook remains strong as the Federal Reserve (Fed) sees interest rates remaining higher for long enough so that inflation could sustainably return to the desired rate of 2%. Currently, traders see the Fed starting to reduce interest rates from the September meeting.

NZD/USD oscillates in a Descending Triangle chart pattern, which exhibits a sharp volatility contraction. The downward-sloping border of the above-mentioned chart pattern is plotted from April 12 high near 0.6000 while the horizontal support is placed from April 16 low at 0.5860.

The Kiwi asset attempts to break above the 20-period Exponential Moving Average (EMA), which trades around 0.5900.

The 14-period Relative Strength Index (RSI) recovers sharply above 40.00. However, the downside bias remains favored until the RSI breaks above 60.00.

Fresh downside would appear if the asset breaks below April 16 low at 0.5860. This would drag the asset toward 8 September 2023 low at 0.5847, followed by the round-level support of 0.5900

On the flip side, a recovery move above March 18 high at 0.6100 will drive the pair toward March 12 low at 0.6135. A breach of the latter will drive the asset further to February 9 high around 0.6160.

NZD/USD hourly chart

• NZD/USD attracts some sellers near 0.5880 on the renewed USD demand on Friday. 
• US officials revealed that Israel carried out military strikes against Iran, boosting safe-haven currencies like the USD. 
• The annual inflation rate in New Zealand remains above the central bank target range, keeping the RBNZ holding rates longer. 

The NZD/USD pair remains under selling pressure around 0.5880 on Friday during the early European session. The risk-off environment amid the escalating tension between Israel and Iran lifts the Greenback and weighs on NZD/USD. Meanwhile, the US Dollar Index (DXY) edges higher above 106.20, nearly the highest level since November 2023. 

US officials revealed that Israel carried out military strikes against Iran. The officials said Israel told the Biden administration early on Thursday that an attack would be launched within the next 24 to 48 hours. Israeli officials informed the US that Iran's nuclear facilities would not be targeted, according to CNN. Investors will monitor the developments surrounding geopolitical tensions in the Middle East. The turmoil and conflict in this region could boost safe-haven flows, benefiting the US Dollar. 

Apart from this, the higher possibility that the US Federal Reserve (Fed) might delay interest rate cuts further provides some support to the USD. Several Fed officials agreed that US inflation remains high and that the US central bank needs more confidence in its trajectory.  

On the Kiwi front, data released from Statistics New Zealand showed that the nation’s inflation has continued to fall. However, it remains above the Reserve Bank of New Zealand’s (RBNZ) target range of 1 to 3%. This might convince the RBNZ to keep the interest rate high for longer, which might help the New Zealand Dollar (NZD) to limit its losses. 

• NZD/USD faces pressure while attempting to extend recovery above 0.5920 as market sentiment turns risk-averse.
• The US Dollar rebounds amid fears that the Fed will keep interest rates higher for a longer period.
• The RBNZ is expected to pivot to rate cuts starting in November.

The NZD/USD pair struggles to extend recovery above the immediate resistance of 0.5920 in Thursday’s early American session. The Kiwi asset faces pressure as the US Dollar rebounds after correcting as investors fear inflation in the United States economy will remain stubbornly higher. The US Dollar Index (DXY) recovers above 106.00 after correcting to 105.75.

The market sentiment turns risk-averse as investors worry about deepening Middle East tensions. The S&P 500 opens on a cautious note as Israel refuses to make a truce with Iran after meeting with foreign ministers of the United Kingdom and Germany. Israel’s Prime Minister Benjamin Netanyahu has made clear that, “their state will do everything necessary to defend itself” reported by The Times.

10-year US Treasury yields rise sharply to 4.63% as investors hope that strong US economic outlook due to tight labor market conditions and robust consumer spending. This will keep inflation persistently higher and will allow Federal Reserve (Fed) policymakers to keep interest rates higher for a longer period.

Meanwhile, traders have repriced speculation about the Reserve Bank of New Zealand (RBNZ) 's rate cuts. The central is expected to pivot to rate cuts in November as NZ inflation grew by 0.6%, as expected in the first quarter of 2024.

NZD/USD faces selling pressure near at April 1 low near 0.5940, which turns into a resistance for the Kiwi bulls on an hourly timeframe. The near-term outlook remains bearish as the asset trades below the 200-hour Exponential Moving Average (EMA), which trades around 0.5950.

The 14-period Relative Strength Index (RSI) drops after failing to sustain above 60.00, suggesting that sellers use the pullback to build fresh shorts.

Fresh downside would appear if the asset breaks below April 17 low at 0.5870. This would drag the asset toward 8 September 2023 low at 0.5847, followed by the round-level support of 0.5900

On the flip side, a recovery move above March 18 high at 0.6100 will drive the pair toward March 12 low at 0.6135. A breach of the latter will drive the asset further to February 9 high around 0.6160.

NZD/USD hourly chart

• NZD/USD extends gains as the US Dollar faces challenges on subdued Treasury yields.
• The latest inflation data from New Zealand offers the RBNZ greater flexibility to consider interest rate cuts.
• Fed’s Mester acknowledged that the central bank needs additional assurance before confirming the sustainability of 2% inflation.

NZD/USD continues to gain ground for the second consecutive day, hovering around 0.5930 during the early European session on Thursday. The decline in the US Dollar (USD) contributes support for the NZD/USD pair, which could be attributed to the improved risk sentiment.

On Wednesday, the report indicated that New Zealand's Consumer Price Index (CPI) has hit a nearly 3-year low, registering at 4% year-over-year in the first quarter. This situation provides the Reserve Bank of New Zealand (RBNZ) with more flexibility to contemplate interest rate cuts. Despite acknowledging persistent inflation in specific sectors, the RBNZ opted to maintain interest rates at 5.5% during its policy meeting last week.

On the other side, Federal Reserve Bank of Cleveland President Loretta Mester acknowledged on Wednesday that inflation has exceeded expectations. Mester stressed that the Fed requires further assurance before confirming the sustainability of 2% inflation, as per a Reuters report.

In addition, US Federal Reserve (Fed) Chair Jerome Powell commented on Tuesday that recent data indicates limited progress in inflation this year, suggesting an extended period before reaching the 2% target. This statement potentially signals a hawkish sentiment surrounding the Fed’s upcoming policy decision, which could provide support for the US Dollar, consequently, limiting the advance of the NZD/USD pair.

On the data side, traders await the release of weekly Initial Jobless Claims and Existing Home Sales from the United States (US) on Thursday, which could provide further insight into the state of the US economy and potentially impact the direction of the Greenback.

• The RSI on the daily chart lies deep in negative terrain but recovered.
• The hourly RSI paints a growing buying momentum, trending the positive territory.
• The MACD on both charts signals a less intense selling momentum.

The NZD/USD stands recovered to 0.5919, it seeing 0.60% gains. The dominant sentiment remains bearish, subtly dominated by sellers due to the consistent positioning beneath key Simple Moving Averages (SMAs). However, indicators on the daily and hourly charts seem to be recovering.

On the daily chart, the Relative Strength Index (RSI) demonstrates a negative sentiment as it continues an under-50 trend. Although there was a slight uptick from the recent low point seen on Monday, the RSI remains in deep in negative territory. Moreover, the Moving Average Convergence Divergence (MACD) displays falling red bars, reinforcing a weakening bearish momentum.

NZD/USD daily chart

The hourly chart presents an interesting contrast. Here, recent RSI readings consistently float above 50, marking a positive territory. The latest reading is 57, revealing that buyers are taking the reins on the hourly scale. The MACD histogram echoes the buying momentum printing rising green bars.

NZD/USD hourly chart

Upon examining the long-term trend, it becomes apparent that the NZD/USD exhibits bearish momentum as it slots below the 20-day, 100-day, and 200-day Simple Moving Average (SMA) indicators. So any movements which keeps the pair beneath these levels shouldn't be considered as a clear buying signal.

• NZD/USD moves higher to 0.5900 as traders see the RBNZ reducing key interest rates from November.
• NZ Q1 inflation grew by 0.6% as expected.
• Fed Powell returns to the “higher for longer interest rates” argument.

The NZD/USD pair extends its recovery to the round-level resistance of 0.5900 in Wednesday’s European session. The Kiwi asset strengthens as traders repriced bets supporting rate cuts by the Reserve Bank of New Zealand (RBNZ).

Investors now see the RBNZ beginning to lower borrowing rates from the November meeting instead of the October meeting. Market expectations for the RBNZ starting to reduce its Official Cash Rate (OCR) have been significantly influenced by the expected rise in New Zealand’s Q1 Consumer Price Index (CPI) data released in Wednesday’s early Asian session.

Stats NZ showed that NZ inflation rose by 0.6% as expected, higher from 0.5% growth recorded in the last quarter of 2023. The annual inflation data decelerated to 4.0% against the prior reading of 4.7%. Currently, the RBNZ has been maintaining its Official Cash Rate (OCR) at 5.5%.

A sharp improvement in market sentiment has also boosted demand for the New Zealand Dollar. S&P 500 futures have posted significant gains in the European session. 10-year US Treasury yields have dropped slightly to 4.64%. The rally in the US Dollar Index (DXY) seems stalled near 106.40 as investors had priced in that the Federal Reserve (Fed) will lean towards keeping interest rates higher for a longer period.

On Tuesday, Fed Chair Jerome Powell said, “The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence” reported Reuters. In this statement, the recent data is hot consumer price inflation data for March.

Currently, financial markets are anticipating that the Fed will start reducing interest rates from the September meeting.

• NZD/USD pair holds positive ground around 0.5905 following New Zealand inflation data. 
• The New Zealand CPI inflation rose to 0.6% QoQ in Q1 from 0.5% in the previous reading, as expected. 
• Powell said recent data have not given Fed greater confidence, likely to take longer than expected to achieve its target. 

The NZD/USD pair rebounds to 0.5905, bouncing off the yearly low of 0.5860 on Wednesday during the early Asian session. The expectation that the Reserve Bank of New Zealand is unlikely to lower its Official Cash Rate (OCR) soon lift the New Zealand Dollar (NZD) against the US Dollar (USD). 

The annual rate of inflation in New Zealand has continued to fall, according to figures released by Stats NZ today. The Consumer Price Index (CPI) rose 4.0% YoY in the first quarter of 2024. Stats NZ’s consumer prices senior manager Nicola Growden said, "Price increases this quarter are the smallest since June 2021. However, they remain above the Reserve Bank of New Zealand’s target range of 1 to 3 percent,”  

Inflationary pressures in New Zealand eased further in the March quarter, although domestic prices remained uncomfortably sticky, keeping rate cuts by the Reserve Bank of New Zealand unlikely to happen soon. This, in turn, provides some support to the NZD. 

On the USD’s front, the hawkish comments from Federal Reserve (Fed) Jerome Powell might lift the US Dollar (USD) in the near term. Fed Chair Powell stated that the US economy has not seen inflation come back to the central bank’s target, suggesting that interest rate cuts are unlikely to be seen in the near future. Investors see a nearly 67% chance that the Fed will cut interest rates in September, according to the CME FedWatch Tool. 

Furthermore, the safe-haven flows amid the rising geopolitical tensions in the Middle East might boost the Greenback and cap the upside of the NZD/USD pair. National Security Advisor Jake Sullivan said in a statement late Tuesday that new sanctions targeting Iran and sanctions against entities supporting the Islamic Revolutionary Guard Corps and Iran's Defense Ministry will be imposed in the coming days.