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

• NZD/USD edges higher to 0.5790 in Thursday’s early Asian session.
• Chinese authorities expect Yuan to weaken as US tariffs loom, weighing on the NZD. 
• Swaps traders are betting on a 25 bps rate cut at the Fed’s policy meeting next week.

The NZD/USD pair trades with mild gains around 0.5790 during the early Asian session on Thursday. Trump trade risks continue to undermine the China-proxy New Zealand Dollar (NZD). Traders await the release of the US November Producer Price Index (PPI) for fresh impetus, which is due later on Thursday. 

China's authorities are considering allowing the Chinese Yuan to depreciate in 2025 as they brace for potential higher US trade tariffs as Donald Trump returns to the White House. The weakening of the CNY translates into a softer NZD as New Zealand trades as proxies to China owing to the importance of China as an export market for New Zealand.

The US inflation, as measured by the Consumer Price Index, rose to 2.7% YoY in November from 2.6% in October, in line with the market consensus. The core CPI, excluding volatile food and energy prices, climbed 3.3% on an annual basis in November, compared to 3.3% during the same period. On a monthly basis, the headline CPI showed a 0.3% MoM, while the core CPI increased 0.3% MoM in November. 

Investors believe that this report was not high enough to keep the Federal Reserve (Fed) from cutting rates at its December meeting next week. Fed funds futures have priced in roughly 95% odds that the US central bank will lower rates in the December meeting, according to CME’s FedWatch Tool.

New Zealand Dollar (NZD) could decline further but may not be able to break clearly below the major support at 0.5770. In the longer run, NZD may decline below 0.5770, but it remains to be seen if it can maintain a foothold below this level, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD may decline below 0.5770

24-HOUR VIEW: “Following NZD’s sharp rise to 0.5888 on Monday, we pointed out yesterday (Tuesday) that ‘the rapid rise appears to be overdone, and instead of continuing to rise, NZD is more likely to trade between 0.5825 and 0.5890.’ Instead of trading in a range, NZD plummeted to 0.5792, closing on a weak note at 0.5801 (-1.10%). The strong downward momentum signals further declines, but deeply oversold conditions suggest NZD may not be able to break clearly below the major support at 0.5770. To sustain the oversold momentum, NZD must remain below 0.5835 (minor resistance is at 0.5820).”

1-3 WEEKS VIEW: “On Monday (09 Dec), when NZD was at 0.5860, we indicated that it ‘is likely to trade with a downward bias, but the likelihood of it reaching 0.5770 is not high for now.’ After NZD rebounded strongly, we indicated yesterday (10 Dec, spot at 0.5860) that ‘although our strong resistance’ at 0.5890 has not been breached yet, the slowing momentum suggests the likelihood of NZD declining to 0.5770 has diminished.’ We did not expect NZD to then drop to 0.5792. While the price action suggests NZD may decline below 0.5770 this time around, it remains to be seen if it can maintain a foothold below this level. On the upside, the ‘strong resistance’ level has moved lower to 0.5865 from 0.5890. Looking ahead, the next level to monitor below 0.5770 is 0.5740.”

• NZD/USD tests its two-year low at 0.5772, a level last seen in November 2023.
• An upward correction could be triggered once the 14-day RSI drops below the 30 mark.
• The nine-day EMA at 0.5839 appears as the primary resistance level.

The NZD/USD pair extends its gains for the second successive day, trading around 0.5780 during the European session on Wednesday. Technical analysis of the daily chart suggests a strengthening bearish bias as the pair is confined within a descending channel pattern.

Additionally, the NZD/USD pair remains trading below the nine- and 14-day Exponential Moving Averages (EMAs), signaling weak short-term price momentum. Furthermore, the 14-day Relative Strength Index (RSI) falls toward the 30 level, reflecting a predominantly bearish sentiment. A drop below the 30 level would indicate an oversold condition, potentially triggering an upward correction.

The immediate support for NZD/USD lies at the two-year low of 0.5772 level, last seen in November 2023. A break below this level could strengthen the bearish sentiment and push the pair to approach the lower boundary of the descending channel at 0.5720 level.

On the upside, NZD/USD may find initial resistance at the nine-day EMA at 0.5839 level, followed by the descending channel’s upper boundary at 0.5850 level. A break above this channel would weaken the bearish bias and support the pair to explore the region around its four-week high of 0.5930 level.

NZD/USD: Daily Chart

• NZD/USD trades with a negative bias near 0.5795 in Wednesday’s early Asian session. 
• The US CPI inflation report will be the highlight on Wednesday. 
• The disappointing Chinese trade figures weigh on the Kiwi. 

The NZD/USD pair trades on a softer note around 0.5795 during the Asian session on Wednesday. However, the upside of the pair seems limited amid weak Chinese trade data and the potential fresh tariffs from US President-elect Donald Trump. Traders await China’s closed-door annual economic conference and US November Consumer Price Index (CPI) data.

Investors expect the US Federal Reserve (Fed) to cut interest rates at the December 17-18 meeting. According to the CME FedWatch Tool, traders are now pricing in nearly 86% odds of a 25 basis points (bps) Fed rate reduction. The US CPI inflation data on Wednesday could offer some hints about the US interest rate outlook before the Federal Reserve's (Fed) final policy meeting of 2024. Any signs of a hotter-than-expected outcome could lift the US Dollar (USD) and act as a headwind for the pair. 

"Obviously the market's kind of nervous about a stronger print, which might lead to a slightly more hawkish outlook on the Fed, or maybe a little bit of a repricing," said Brad Bechtel, global head of FX at Jefferies. 

China's exports slowed sharply, and imports unexpectedly fell in November, raising concerns about the world’s second-largest economy as Donald Trump's imminent return to the White House brings the potential for fresh tariffs. The disappointing Chinese trade figures might drag the China-proxy Kiwi lower, as New Zealand is one of the leading trading partners of China.

• NZD/USD declines on Tuesday, retreating to 0.5800 after failing to reclaim the 20-day SMA.
• Pair faces strong rejection at the 20-day SMA, falling to fresh lows not seen since November 2023.
• RSI declines sharply in negative territory, while MACD histogram shows weakening bullish momentum with decreasing green bars.

The NZD/USD pair faced renewed selling pressure on Tuesday, dropping by 1.14% to 0.5800 after a failed attempt to reclaim the 20-day Simple Moving Average (SMA). The rejection at this key resistance level highlights the pair's inability to reverse its bearish trend, pushing it to fresh lows not seen since November 2023.

Technical indicators reinforce the bearish sentiment. The Relative Strength Index (RSI) has declined sharply to 39, remaining in negative territory and signaling intensifying selling pressure. Similarly, the Moving Average Convergence Divergence (MACD) histogram prints decreasing green bars, suggesting weakening bullish momentum and a lack of recovery signals.

With the pair now trading near the critical 0.5800 psychological support level, the downside risks remain elevated. A break below this level could pave the way for further declines, potentially targeting the 0.5770-0.5750 range. On the upside, the 20-day SMA at 0.5890 remains the key barrier, with a decisive break above it needed to shift the outlook back to neutral or bullish.

NZD/USD daily chart

• NZD/USD faces an intense sell-off amid uncertainty ahead of China’s two-day annual economic conference.
• The RBNZ is expected to cut interest rates by 50 bps in the policy meeting in February 2025.
• The next move in the US Dollar will be influenced by the US inflation data for November.

The NZD/USD pair plunges to near 0.5820 in Tuesday’s North American session. The Kiwi pair faces intense selling pressure as antipodean currencies weaken amid uncertainty ahead of China’s closed-door annual economic conference to be held on Dec 11-12.

China’s Politburo is expected to announce big-bank economic stimulus to boost domestic consumption and stabilize their beaten-down real estate sector, a scenario that will boost trading activities with the New Zealand (NZD) and strengthen the New Zealand Dollar’s (NZD) appeal, being one of the leading trading partners of China.

Domestically, the Kiwi dollar remains under pressure as market expectations for the Reserve Bank of New Zealand (RBNZ) to cut interest rates again by 50 basis points (bps) at the first meeting of 2025 in February. RBNZ dovish bets fuelled further after comments from NZ Prime Minister Christopher Luxon emphasized on lowering inflation and interest rates to stimulate the economy.

Meanwhile, a further recovery in the US Dollar (USD) has also weighed on the Kiwi pair. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 106.40. The Greenback gains even though market expectations that the Federal Reserve (Fed) will cut interest rates by 25 basis points (bps) to 4.25%-4.50% remain firm.

Going forward, investors will focus on the United States (US) Consumer Price Index (CPI) data for November that could influence Fed dovish bets, which will be published on Wednesday.

Instead of continuing to rise, New Zealand Dollar (NZD) is more likely to trade between 0.5825 and 0.5890. In the longer run, the likelihood of NZD declining to 0.5770 has diminished, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Likelihood of NZD declining to 0.5770 has diminished

24-HOUR VIEW: “After NZD dropped sharply to 0.5824 last Friday, we stated yesterday that ‘there is scope for NZD to continue to weaken.’ However, we pointed out that ‘given the oversold conditions, any decline is unlikely to reach last month’s low, near 0.5795 (there is another support at 0.5810).’ NZD subsequently dropped to 0.5805 before staging a surprisingly sharp advance to 0.5888. The rapid rise appears to be overdone, and instead of continuing to rise, NZD is more likely to trade between 0.5825 and 0.5890 today.”

1-3 WEEKS VIEW: “Yesterday (09 Dec), when NZD was at 0.5835, we indicated that it ‘is likely to trade with a downward bias toward 0.5795.’ We pointed out, ‘the likelihood of it reach 0.5770 is not high for now.’ NZD subsequently dropped to 0.5805 before rebounding strongly to 0.5888. Although our ‘strong resistance’ at 0.5890 has not been breached yet, the slowing momentum suggests the likelihood of NZD declining to 0.5770 has diminished.”

• NZD/USD drifts lower on Tuesday and is pressured by a combination of factors.
• Bets for aggressive RBNZ easing and China’s economic woes weigh on the Kiwi.
• Expectations for a less dovish Fed underpin the USD and contribute to the slide.

The NZD/USD pair struggles to capitalize on the previous day's bounce from the vicinity of the 0.5800 mark or a near two-week low and attracts fresh sellers on Tuesday. Spot prices retain intraday bearish bias through the first half of the European session and currently trade around the 0.5825-0.5820 region, within striking distance of a one-year trough touched in November.

The New Zealand Dollar (NZD) continues to be undermined by expectations for a more aggressive policy easing by the Reserve Bank of New Zealand (RBNZ). Adding to this, disappointing readings on China's exports and imports added to worries about a fragile recovery in the world's second-largest economy, which further undermined demand for antipodean currencies, including the Kiwi. This, along with a modest US Dollar (USD) uptick, exerts additional pressure on the NZD/USD pair. 

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, looks to build on the post-NFP bounce from a nearly one-month low amid bets that the Federal Reserve (Fed) will adopt a cautious stance on cutting interest rates. Moreover, the worsening Russia-Ukraine war and persistent geopolitical tensions in the Middle East drive some haven flows towards the buck. This, along with concerns about US President-elect Donald Trump's tariffs, weighs on the NZD/USD pair.

The aforementioned fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside, though traders might await the release of the US consumer inflation figures on Wednesday. The crucial US Consumer Price Index (CPI) report will be looked for cues about the interest rate outlook in the US and guide Fed policymakers on their decision later this month. This, in turn, will influence the USD price dynamics and provide a fresh impetus to the NZD/USD pair.

• NZD/USD remains tepid following the release of China’s Trade Balance data.
• China's Trade Balance expanded to CNY 692.8 billion in November, up from CNY 679.1 billion in the previous month.
• Traders adopt caution ahead of the US Consumer Price Index (CPI) data release on Wednesday.

NZD/USD retraces its recent gains, trading around 0.5830 during Asian hours on Tuesday. The New Zealand Dollar (NZD) remains subdued following China’s Trade Balance data for November. However, buyers of the Kiwi dollar welcomed the decision from New Zealand's top trading partner, China, to implement a more proactive fiscal policy and moderately loose monetary policy next year.

China's Trade Balance (CNY) expanded to CNY 692.8 billion in November, up from CNY 679.1 billion in the previous month. Exports grew by 1.5% year-over-year in November, compared to the 11.2% rise in October. Meanwhile, imports increased by 1.2% YoY, recovering from the 3.7% decline recorded earlier.

The New Zealand Dollar remains under pressure as Prime Minister Christopher Luxon reaffirms his commitment to lowering inflation and interest rates to bolster the economy. This suggests the possibility of significant rate cuts early next year.

Additionally, the NZD/USD pair depreciates as the US Dollar (USD) extends its winning streak for the third successive day as traders adopt caution ahead of the US Consumer Price Index (CPI) data release on Wednesday. Traders are now pricing in nearly an 85.8% chance of Fed rate reductions by 25 basis points on December 18, according to the CME FedWatch Tool.

On Monday, the Federal Reserve Bank of New York highlighted in its consumer survey summary that US consumers are navigating uncertain economic expectations. The survey indicated a sharp improvement in consumers' outlook on their financial situations and the federal government’s fiscal condition, alongside a significant shift in expectations regarding debt affordability and credit conditions.

• NZD/USD rebounds by 0.53% on Monday, settling around 0.5860.
• Pair attempts to reclaim the 20-day SMA but faces rejection, keeping upside limited.
• RSI rises sharply but remains in negative territory, while MACD histogram shows weakening bullish momentum.

The NZD/USD pair posted a modest recovery on Monday, rising by 0.53% to 0.5860 after a sharp decline last week. However, the pair once again failed to breach the 20-day Simple Moving Average (SMA), currently near 0.5890, reinforcing its role as a key resistance level.

Technical indicators provide mixed signals but lean bearish. The Relative Strength Index (RSI) has risen sharply to 47, signaling improving momentum, though it remains in negative territory, reflecting ongoing selling pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram shows shrinking green bars, indicating waning bullish momentum despite the pair's daily gains.

While the pair holds above the 0.5830 support level, a sustained break above the 20-day SMA is needed to confirm a shift in momentum in favor of the bulls. On the downside, failure to maintain current levels could see the pair revisiting the 0.5830 support and potentially targeting the 0.5800 psychological level if selling pressure resumes.

NZD/USD daily chart

• NZD/USD recovers sharply to near 0.5870 as China’s Politburo supported expansionary monetary and fiscal policies.
• The RBNZ is expected to cut interest rates again by 50 bps.
• Investors await the US CPI data for fresh interest rate guidance.

The NZD/USD pair rebounds strongly to near 0.5870 in the North American trading session on Monday after testing the annual low of 0.5800. The Kiwi pair jumps higher as the New Zealand Dollar (NZD) strengthens after China’s Politburo vowed to implement “more proactive fiscal policy and moderately loose monetary policy.” A scenario that will boost stimulus and allow the economy to achieve its economic targets.

It is worth noting that New Zealand is one of the leading trading partners of China and a boost to economic stimulus is favorable for the New Zealand Dollar.

Domestically, the outlook of the NZD remains weak as the Reserve Bank of New Zealand (RBNZ) is expected to continue with its aggressive policy-easing stance. The RBNZ reduced its Official Cash Rate (OCR) by 50 basis points (bps) to 4.25% in its monetary policy meeting on November 27 and guided for a similar rate cut pace if economic conditions continue to evolve as projected.

Meanwhile, the US Dollar (USD) consolidates, with investors focusing on the United States (US) Consumer Price Index (CPI) data for November, which will be released on Wednesday.

NZD/USD finds temporary support near 0.5800, while the 20-day Exponential Moving Average (EMA) near 0.5930 continues to act as a major barricade for the NZD bulls. The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and climbed above 40.00, suggesting that the bearish momentum has faded. However, the bearish trend has not extinguished.

The Kiwi pair is expected to decline to near the October 2023 low at 0.5770 and the round-level support of 0.5700 if it retreats below 0.5820.

On the contrary, an upside move above the November 15 high of 0.5970 will drive the asset toward the psychological figure of 0.6000 and the November 7 high of 0.6040.

NZD/USD daily chart

Scope for New Zealand Dollar (NZD) to continue to weaken; given the oversold conditions, any decline is unlikely to reach last month’s low, near 0.5795. In the longer run, NZD is likely to trade with a downward bias towards 0.5795; the likelihood of it reaching 0.5770 is not high for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Likelihood of it reaching 0.5770 is not high for now

24-HOUR VIEW: “When NZD was at 0.5880 last Friday, we were of the view that it ‘is likely to trade in a higher range of 0.5860/0.5900.’ Our view was incorrect, as it dropped to 0.5824, closing at 0.5832, sharply lower by 0.90% for the day. Today, there is scope for NZD to continue to weaken. Given the oversold conditions, any decline is unlikely to reach last month’s low, near 0.5795 (there is another support at 0.5810). Resistance is at 0.5845, followed by 0.5865.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (05 Dec, spot at 0.5860), wherein NZD is ‘expected to trade in a 0.5830/0.5930 range.’ Last Friday, NZD broke below 0.5830, reaching a low of 0.5824. There has been a slight increase in momentum, and NZD is likely to trade with a downward bias towards 0.5795. While NZD could break below this level, the likelihood of it reaching last year’s low of 0.5770 is not high for now. To sustain the momentum, NZD must remain below the ‘strong resistance’ level, currently at 0.5890.”

• NZD/USD extends the decline to around 0.5805 in Monday's early European session, down 0.47% on the day. 
• Trump's tariff threats and Chinese deflationary pressure exert some selling pressure on the China-proxy Kiwi. 
• The US CPI inflation data will take center stage on Wednesday. 

The NZD/USD pair faces some selling pressure to around 0.5805 during the early European session on Monday. The renewed US Dollar (USD) demand and discouraging Chinese consumer inflation undermine the pair. The US November Consumer Price Index (CPI) report will be the highlight on Wednesday. 

China's CPI inflation hit a five-month low in November, indicating that Beijing's recent measures to boost weakening economic demand are having little impact, weighing on the China-proxy New Zealand Dollar (NZD) as China is a major trading partner to New Zealand. 

Additionally, the potential fresh tariffs from US President-elect Donald Trump might create a headwind for NZD/USD. On Monday, Fitch Ratings lowered its economic projections for China for 2025 to 4.3% from 4.5%, citing risks of even higher US tariffs on Chinese goods.

On the USD’s front, Federal Reserve (Fed) officials appeared on track to lower its interest rates in the December meeting after data showed the US labor market remained solid but continued to cool in November. According to the CME Group's FedWatch Tool, markets currently see an 85.1% possibility of a 25 basis points (bps) rate cut this month. 

With a quarter-point rate cut by the US central bank next week a near certainty as per market pricing, analysts believe the Greenback might face some profit-taking after its long run-up in the four weeks since Donald Trump won the US Presidential election. This, in turn, might cap the downside for the NZD/USD pair. 

However, traders will focus on the US inflation report on Wednesday for fresh impetus. "The inflation read may determine if we will have a hawkish cut from U.S. policymakers next week, which could still see the U.S. dollar stronger if the Fed were to set the stage for a pause in the rate-cutting process into early 2025," said IG market strategist Yeap Jun Rong. 

• NZD/USD drops sharply on Friday, settling around 0.5830.
• Pair faces strong resistance at the 20-day SMA, which remains unbroken.
• Indicators show weakening buying traction, reinforcing the bearish outlook.

The NZD/USD pair extended its decline on Friday, plunging to 0.5830 after failing to break above the 20-day Simple Moving Average (SMA). This key technical level continues to act as a formidable resistance, preventing a bullish recovery and leaving the pair under significant selling pressure.

Technical indicators reflect the loss of bullish momentum. The Relative Strength Index (RSI) shows a falling trajectory, staying in negative territory, signaling weakening buying traction. Meanwhile, the Moving Average Convergence Divergence (MACD) displays a shrinking histogram with fading green bars, indicating a slowdown in bullish momentum and reinforcing the bearish sentiment.

For now, the outlook remains decidedly bearish, with the 20-day SMA serving as a critical barrier for any upside attempts. Should the selling pressure persist, the pair may target further declines towards the 0.5800 psychological level. On the upside, a decisive break above the 20-day SMA, currently near 0.5880, is necessary to shift momentum in favor of the bulls.

NZD/USD daily chart

• NZD/USD plunges below 0.5850 amid dismal risk tone and firm RBNZ dovish bets.
• The US Dollar edges higher ahead of the US NFP data for November.
• Economists estimate the US jobless rate to have accelerated to 4.2%.

The NZD/USD pair plummets below the key support of 0.5850 in European trading hours on Friday. The Kiwi pair plunges as the New Zealand Dollar (NZD) weakens across the board amid firm expectations that the Reserve Bank of New Zealand (RBNZ) will follow an aggressive policy-easing approach.

The RBNZ reduced its Official Cash Rate (OCR) by 50 basis points (bps) to 4.25% in its monetary policy meeting on November 27 and guided for similar rate cut pace if economic conditions continue to evolve as projected. Traders are also confident the RBNZ will cut its OCR again by 50 bps to 3.75% in the February policy meeting.

Meanwhile, cautious market mood ahead of the United States (US) Nonfarm Payrolls (NFP) data release has also weighed on the Kiwi dollar. S&P 500 futures exhibit a subdued performance in European session. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks higher from the key support of 105.70.

The US NFP data will influence market expectations about whether the Federal Reserve (Fed) will cut interest rates again in the policy meeting on December 18. The Fed has already reduced its key borrowing rates by 75 bps in its meetings in September and November.

Economists expect the US economy added 200K fresh workers, significantly higher than 12K in October. Payrolls were significantly lower last month as some industries were affected by the hurricanes and there were labor strikes at Boeing plants. The Unemployment Rate is estimated to have accelerated to 4.2% from the former release of 4.1%.

The New Zealand Dollar (NZD) is likely to trade in a higher range of 0.5860/0.5900. In the longer run, NZD is expected to trade in a 0.5830/0.5930 range, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD can test the 0.5830 support near term

24-HOUR VIEW: “Yesterday, we expected NZD to ‘trade in a 0.5830/0.5890 range.’ NZD then traded between 0.5849 and 0.5887, closing at 0.5885. Although the underlying tone appears to have firmed slightly, this is likely to lead to a higher trading range of 0.5860/0.5900 instead of a sustained rise.”

1-3 WEEKS VIEW: “Our update from yesterday (05 Dec, spot at 0.5860) is still valid. As highlighted, although NZD dropped to a low of 0.5830 two days ago, there does not appear to have enough momentum to break clearly below 0.5830.” We continue to hold the view that NZD “is expected to trade in a 05830/0.5930 range.”

• NZD/USD meets with a fresh supply amid a slight deterioration in the global risk sentiment.
• The USD languishes near a multi-week low, though it does little to lend any support to the pair.
• Traders look to the US NFP report for cues about the Fed’s rate-cut path and a fresh impetus. 

The NZD/USD pair attracts fresh sellers during the Asian session on Friday and erodes a part of the previous day's modest gains. Spot prices  drop to a daily low, around the 0.5860 region in the last hour, as traders keenly await the release of the US Nonfarm Payrolls (NFP) report for some meaningful impetus heading into the weekend. 

The closely watched US monthly jobs data could provide some cues about the Federal Reserve's (Fed) rate cut path, which, in turn, will play a key role in influencing the US Dollar (USD) price dynamics and drive the NZD/USD pair. In the meantime, the recent decline in the US Treasury bond yields keeps the USD bulls on the defensive near a multi-week low. That said, bets for a less dovish Fed, along with a softer tone across the global equity markets, act as a tailwind for the buck and weigh on perceived riskier currencies, including the Kiwi. 

Investors seem convinced that US President-elect Donald Trump's policies will boost inflation and force the Fed to stop cutting rates. Moreover, the recent hawkish remarks from several FOMC members, including Fed Chair Jerome Powell, suggest that the US central bank will adopt a more cautious stance. This, along with persistent geopolitical risk, weighs on investors' sentiment. Apart from this, bets for aggressive policy easing by the Reserve Bank of New Zealand (RBNZ) support prospects for further weakness in the NZD/USD pair.

From a technical perspective, the recent range-bound price action over the past three weeks or so might still be categorized as a bearish consolidation phase. Furthermore, the lack of any meaningful buying and negative oscillators on the daily chart validates the near-term bearish outlook for the NZD/USD pair. Hence, any attempted recovery might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly. 

• NZD/USD rises 0.40% on Thursday, approaching 0.5890.
• The pair remains capped by the 20-day SMA, limiting bullish momentum.
• Technical indicators show slight improvement but no clear reversal signals.

The NZD/USD pair edged higher on Thursday, gaining 0.15% to trade near 0.5890. Despite this upward move, the pair continues to face strong resistance at the 20-day Simple Moving Average (SMA), a level that remains unconquered and keeps the broader outlook tilted to the downside.

Technical indicators are offering a mixed picture. The Relative Strength Index (RSI) has gained some ground, moving closer to neutral levels, suggesting slight easing of selling pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram has turned slightly more positive, with green bars hinting at improving momentum. However, neither indicator provides clear signals of a sustained reversal, keeping traders cautious.

For the bulls to regain control, NZD/USD needs to decisively break above the 20-day SMA, which is currently acting as a key resistance level. Until this level is reclaimed, the outlook will remain bearish. On the downside, any renewed selling pressure could push the pair back towards support at 0.5860 and the psychological 0.5800 level.

NZD/USD daily chart

• NZD/USD rebounds to near 0.5880 as weak US Services PMI weighs on the US Dollar.
• Fed Powell said officials can afford to be cautious on interest rate cuts.
• The RBNZ is expected to cut its OCR by 50 bps in its first policy meeting of 2025.

The NZD/USD pair bounces back to near 0.5880 in Thursday’s European session after a three-day losing spree. The Kiwi pair rebounds as the US Dollar (USD) drops due to weaker-than-expected United States (US) ISM Services PMI data for November.

Wednesday’s Services PMI data showed that activities in the services sector expanded at a slower-than-expected pace to 52.1 from 56.0 in October. Economists expected the Service PMI at 55.5.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades cautiously near the key support of 106.00.

Going forward, the next move in the USD will be guided by the US Nonfarm Payrolls (NFP) data for November, which will be released on Friday. Economists expect that the US economy added 200K fresh workers. The Unemployment Rate is estimated to have accelerated to 4.2% from 4.1% in October.

The official labor market data will significantly influence market speculation for the Federal Reserve’s (Fed) likely interest rate path. Meanwhile, the comments from Fed Chair Jerome Powell at the New York Times DealBook Summit on Wednesday indicated that officials could have the comfort of becoming cautious on interest rate cuts, assuming that the economic growth is stronger than what the central bank had anticipated in September.

In the New Zealand (NZ) region, the expectations of more large-size interest rate cuts from the Reserve Bank of New Zealand (RBNZ) would keep the New Zealand Dollar’s (NZD) outlook bearish. The RBNZ has already reduced its Official Cash Rate (OCR) to 4.25% and is expected to cut by 50 basis points (bps) in its policy meeting on February 19.