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

• NZD/USD could test the psychological support of 0.6100 on Thursday.
• Technical analysis indicates a bearish momentum for the pair.
• The area around the 23.6% Fibonacci retracement level and the 21-day EMA could act as a resistance zone.

NZD/USD continues to gain ground for the second consecutive day, which could be attributed to the dovish remarks by the Federal Reserve. The pair trades above the psychological support of 0.6100 during the early European session on Thursday.

A decisive move below this level could exert downward pressure on the NZD/USD pair to navigate the area around the major support of 0.6050.

A break below the latter could lead the NZD/USD pair to revisit March’s low at 0.6024, followed by the psychological support at 0.6000. Traders will closely monitor these levels for potential shifts in market sentiment.

According to the Moving Average Convergence Divergence (MACD) analysis, a prevailing downward sentiment is indicated for the NZD/USD pair. This is evidenced by the MACD line positioned below both the centerline and the signal line, signaling a bearish trend. Furthermore, the 14-day Relative Strength Index (RSI) is below the 50 level, providing additional confirmation of the bearish sentiment.

On the upside, the NZD/USD pair could find a key barrier lies at the 23.6% Fibonacci retracement level at 0.6115, aligned with the 21-day Exponential Moving Average (EMA) at 0.6118. The pair could face further resistance barriers if it climbs higher, with key levels anticipated at 0.6150.

NZD/USD: Daily Chart

• NZD/USD gains ground around 0.6090 on the weaker USD. 
• New Zealand's GDP for Q4 came in at -0.1% QoQ vs. -0.3% prior, weaker than expected. 
• The Fed held interest rates steady at its March meeting on Wednesday, as widely expected. 
• The US S&P Global PMI for March will be due on Thursday. 

The NZD/USD pair trades on a stronger note below the 0.6100 mark during the early Asian session on Thursday. The decline of the US Dollar (USD) after the Federal Reserve (Fed) left its interest rates unchanged and Fed Chair Jerome Powell delivered a dovish message to provide some support to the pair. NZD/USD currently trades around 0.6090, gaining 0.15% on the day. 

The latest data from Statistics New Zealand on Thursday showed that the nation’s GDP growth number contracted 0.1% QoQ in the fourth quarter from the previous reading of 0.3% contraction. The Annualized GDP for Q4 shrank 0.3% YoY from the 0.6% contraction in the previous reading. Both figures came in worse than market expectations, which might cap the upside of the New Zealand Dollar (NZD). 

On the other hand, the Fed held the rate steady at 5.25–5.50% at its March meeting on Wednesday, with the median dot plot for 2024 unchanged from the 75 basis points (bps) of cuts shown in the December projections. During the press conference, Fed Chair Jerome Powell stated that a strong labour market Data wouldn’t deter the central bank from cutting rates. Powell emphasized that the central bank will wait for more data that inflation is sustainably moderating toward its 2% target. 

Furthermore, Fed’s Powell reiterated that policymakers still intend to cut rates before the end of this year, given economic growth continues. The dovish comments from Powell exert some selling pressure on the Greenback and create a tailwind for NZD/USD. 

Looking ahead, traders will keep an eye on the preliminary US S&P Global Purchasing Managers Index (PMI) for March, the weekly Initial Jobless Claims and Existing Home Sales. On Friday, New Zealand’s Trade Balance will be released. 

• NZD/USD breaks to fresh lows after breaking out of the bottom of a multi-month range. 
• The pair is now oversold and could correct back in the near-term. 
• Eventually NZD/USD is likely to continue its descent towards bearish price targets. 

NZD/USD has broken out of the bottom of a long-term range and despite reaching oversold extremes is tipped to go even lower. 

The NZD/USD had been oscillating within a multi-month range stretching from a floor at about 0.6080 to a ceiling at roughly 0.6210. On Tuesday it decisively broke below the floor and took a step lower – a bearish sign for price. 

New Zealand Dollar versus US Dollar: 4-hour chart

NZD/USD is currently trading at around 0.6035 and at oversold extremes according to the Relative Strength Index (RSI) momentum indicator. This indicates that there is a possibility the pair could pullback higher. The signal for a would come from the RSI existing oversold and rising again.Traders are advised not to add any more short-orders to their positions whilst the RSI is oversold and to close shorts when the indicator rises out of oversold. 

Despite warning signs of a correction the longer-term outlook remains bearish. The pair is in an established short-term downtrend, with progressively lower peaks and troughs in the price action, and given the old adage that “the trend being your friend,” this suggests more downside as probable. 

Further, NZD/USD has broken out of a long-term range and according to technical analysis theory the height of the range can be used as a guide to how much lower the pair could go. In the case of NZD/USD it suggests more downside is on the horizon. 

The 0.618 Fibonacci ratio of the height of the range extrapolated from the breakout point lower provides an initial target at 0.5964. The 1.000 ratio provides a further target at 0.5892.

• NZD/USD falls to 0.6040 as dismal market sentiment dampens the appeal of risky assets.
• The US Dollar consolidates ahead of the Fed’s policy meeting.
• The NZ GDP is forecasted to have grown by 0.1% in the last quarter of 2023.

The NZD/USD pair continues to face a sell-off and drops to 0.6040 in the late Asian session on Wednesday. The Kiwi asset is under pressure as investors have turned cautious ahead of the Federal Reserve’s (Fed) interest rate decision, which will be announced at 18:00 GMT.

S&P 500 futures have posted some losses in the Asian session, portraying a decline in investors’ risk appetite. The US Dollar Index (DXY) consolidates around 103.85 as investors stay on the sidelines ahead of Fed policy.

The Fed is widely anticipated to keep interest rates unchanged in the range of 5.25%-5.50% for the fifth time in a row. While uncertainty over rate-cut projections will keep the upside in risk-sensitive assets limited. Investors hope that the Fed could support keeping interest rates higher for longer as inflation remained stubborn in February. 

Investors will keenly focus on the dot plot, which gets updated quarterly and shows projections for interest rates for different timeframes. 

Meanwhile, the next move in the New Zealand Dollar will be guided by domestic Gross Domestic Product (GDP) numbers for the final quarter of 2023. The economy is anticipated to have expanded slightly by 0.1% after contracting by 0.3% in the third quarter of 2023. 

An upbeat GDP data would allow the Reserve Bank of New Zealand (RBNZ) to maintain interest rates higher for longer. However, a decline in GDP figures would suggest that the New Zealand economy is in a technical recession. The RBNZ would be in trouble as it will be needed to make a balancing act between high inflation and vulnerable economic prospects.

• The daily chart of NZD/USD presents a bearish outlook with the RSI and MACD deep in the red zone.
• On the hourly chart, the selling pressure is easing.
• The NZD/USD is operating below the main SMAs, indicating a persisting bearish bias.

The NZD/USD pair registered a decline of 0.54%, falling towards 0.6050 in Tuesday's session. Earlier in the session, indicators reached oversold conditions on the hourly chart, and ahead of the Asian session, the pair seems to be consolidating

On the daily chart, the pair is facing intense selling pressure, as indicated by the declining Relative Strength Index (RSI). The latest reading stands at 36, situated in the negative territory and nearing the oversold threshold, suggesting that sellers currently dominate the market. The Moving Average Convergence Divergence (MACD) also confirms this bearish sentiment, with its rising red bars indicating mounting negative momentum.

NZD/USD daily chart

On the hourly chart, however, the picture differs. The RSI readings appear to fluctuate within the negative territory, with the last reading measured at 42, slightly higher than the reading on the daily chart, denoting tempered selling pressure after bottoming at a low of 22 earlier in the session. Here, the MACD shows a declining selling pressure.

NZD/USD hourly chart

On a broader scale, the trend is still bearish as the pair continues to trade below its 20, 100, and 200-day Simple Moving Averages (SMAs).

• NZD/USD edges lower to 0.6053 amid the stronger US Dollar. 
• The Fed Reserve is anticipated to leave rates unchanged for a fifth straight time on Wednesday.
• The positive headline surrounding the China-New Zealand free trade agreement failed to lift the Kiwi. 
• Fed interest rate decision on Wednesday will be a closely watched event ahead of New Zealand’s GDP Q4 growth numbers. 

The NZD/USD pair remains under some selling pressure during the early European session on Tuesday. The uptick in the US Dollar Index (DXY) to two-week highs above 103.80 weighs on the NZD/USD pair. Markets are in a cautious mood ahead of the Federal Reserve's (Fed) monetary policy meeting on Wednesday. The pair currently trades around 0.6053, down 0.53% on the day. 

The US economic data in recent weeks indicated that the US economy is strong and inflation remains elevated. The data might convince the Fed to delay the interest rate cuts, which lift the US Dollar (USD) broadly. Fed Chairman Jerome Powell said he was not concerned about inflation data that remains above the central bank’s target, as the Fed’s preferred gauge has eased notably over the past year. 

Markets expect the Fed to leave interest rates unchanged for a fifth straight time at the end of its two-day meeting on Wednesday. Powell stated that the Fed is likely to cut its key interest rate this year, but he wants to see more evidence that inflation is falling sustainably back to the 2% target. Financial markets have priced in a nearly 73% chance that the Fed will cut rates in July, according to the CME FedWatch Tools.

On the Kiwi front, Chinese Foreign Minister Wang Yi said on Tuesday that China is ready to work with New Zealand to implement an upgraded version of the China-New Zealand free trade agreement. However, this positive headline failed to boost the China-proxy New Zealand Dollar (NZD). 

Looking ahead, traders will keep an eye on New Zealand’s Westpac Consumer Survey for the first quarter (Q1), due on Wednesday, followed by the Current Account. The Fed interest rate decision and the press conference will be the highlight for this week, On Thursday, the focus will turn to the New Zealand Gross Domestic Product (GDP) for Q4, which is expected to grow 0.1% QoQ. 

• The daily chart reveals a bearish bias, with RSI transitioning to negative territories and rising red bars in the MACD.
• The hourly chart demonstrates a contrary perspective flashing signals on a potential shift to the upside.
• If bears want to confirm a bearish outlook, they must conquer the 200-day SMA.

In Monday's trading, NZD/USD remained largely unchanged around 0.6085 while the pair showed ongoing sell-off pressure. However, subtle hints of an imminent near-term reversal are beginning to show up on the hourly chart as bears may step out to consolidate their movements.

The continuous decline of the daily Relative Strength Index (RSI) from positive to negative territories demonstrates the prevailing sell-side pressure. The recent reading of the RSI indicates ongoing negative conditions, further substantiated by a sequence of rising red bars in the Moving Average Convergence Divergence (MACD).

NZD/USD daily chart

Moving on to the hourly chart, the NZD/USD pair persists in its bearish trend. The Relative Strength Index (RSI) reflects similar negative conditions as observed on the daily chart, albeit, the index seems to have flattened. In addition, a shift in momentum can be discerned with the emergence of green bars in the MACD histogram. These indicate positive momentum in the last trading hours.

NZD/USD hourly chart

Given the outlooks on the daily and hourly chart, after the sellers pierced through the 20 and 100-day Simple Moving Averages (SMAs), the last hope for the pair is the 200-day average which presents strong support. In case the buyers fail to defend it, the overall trend will turn bearish.

• NZD/USD finds buying interest near 0.6080 as market sentiment slightly improves
• China’s upbeat Retail Sales data improve risk appetite of investors.
• The US Dollar falls slightly ahead of Fed policy decision.

The NZD/USD pair finds a temporary cushion near 0.6080 in Monday’s European session after a sharp sell-off in the last two trading sessions. The Kiwi asset rebounds to the round-level resistance of 0.6100 as market sentiment improves after China’s Industrial Production and Retail Sales data for February outperforms expectations.

China’s Retail Sales grew at a higher pace of 5.5% against expectations of 5.2% but were lower than the prior reading of 7.4%. The Industrial Production surprisingly rose to 7.0% against the consensus of 5.0% and the former reading of 6.8%. The New Zealand economy is one of the leading trading partners of China. Therefore, an improvement in China’s economic growth strengthens the appeal of the New Zealand Dollar.

Meanwhile, the market sentiment will play a key role this week as various central banks are lined up for interest rate decisions. The Federal Reserve (Fed) is scheduled to announce the policy decision on Wednesday alongwith the release of the dot plot and economic projections. The central bank is expected to keep interest rates unchanged in the range of 5.25%-5.50%.

The US Dollar faces slight pressure on cautiously optimistic market mood. The US Dollar Index (DXY) drops gradually to 103.40.

NZD/USD trades back and forth from a month, ranging between 0.6037-0.6218 on a daily timeframe. A prolonged consolidation indicates indecisiveness among market participants. The 20-period Exponential Moving Average (EMA) near 0.6131 broadly trades close to spot prices.

The 14-period Relative Strength Index (RSI) trades in a 40.00-60.00 range, which indicates a sharp volatility contraction.

Going forward, a downside move below February 13 low near 0.6050 would 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 breaks above the round-level resistance of 0.6200. This would drive the asset towards a February 22 high at 0.6220, followed by a January 11 high at 0.6260.

NZD/USD daily chart

• NZD/USD attracts some buyers near a technically significant 200-day SMA on Monday.
• Mostly better-than-expected Chinese data lend support amid subdued USD demand.
• The upside seems limited as traders await the crucial Fed decision for a fresh impetus.

The NZD/USD pair finds some support in the vicinity of the very important 200-day Simple Moving Average (SMA) and stages a modest recovery from a one-and-half-week low, around the 0.6080 region touched during the Asian session on Monday. Spot prices stick to a mildly positive bias following the release of Chinese macro data, albeit lack bullish conviction and remain below the 0.6100 round-figure mark.

Data published by the National Bureau of Statistics (NBS) showed that China's Retail Sales rose 5.5% YoY in February against the 5.2% expected and 7.4% in the previous month. Adding to this, the country’s Industrial Production increased by 7.0% YoY as compared to the 5.0% anticipated and the 6.8% in January, while Fixed Asset Investment grew by 4.2% during the first two months of 2024. This, to a larger extent, overshadows an unexpected rise in China's unemployment rate to 5.3% in February from 5.1% previous and lends some support to antipodean currencies, including the Kiwi.

Apart from this, subdued US Dollar (USD) price action turns out to be another factor acting as a tailwind for the NZD/USD pair. However, expectations that the Federal Reserve (Fed) will stick to its higher-for-longer interest rates narrative to bring down inflation continue to act as a tailwind for the Greenback and cap gains for the currency pair. Traders might also refrain from placing aggressive directional bets and m,ove to wait on the sidelines ahead of the key central bank event risk – the outcome of the highly-anticipated two-day FOMC monetary policy meeting on Wednesday.

The aforementioned fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the NZD/USD pair's recent pullback from the 0.6215 region, or the monthly peak, has run its course. Nevertheless, spot prices, for now, seem to have snapped a two-day losing streak and remain at the mercy of the USD price dynamics in the absence of any relevant market-moving economic data from the US on Monday.

• The daily RSI shows a rise in selling traction, supported by the MACD depicting growing red bars.
• The hourly RSI indicates oversold conditions, signaling a potential pullback or bullish correction in the short term.
• Despite daily bearish tendencies, the pair still holds the 200-day SMA.

The NZD/USD pair declined to 0.6086, with a significant 0.77% downturn in Friday's session. The market sentiment leans heavily toward the sellers, however, there is a faint glimmer of hope for the buyers, as they still hold on to the 200-day Simple Moving Average (SMA).

On the daily chart, the Relative Strength Index (RSI) has fallen into negative territory, after recovering above 50 last week, which suggests increasing selling pressure. Moreover, the Moving Average Convergence Divergence (MACD) histogram features rising red bars which further indicate growing bearish sentiment in the market.

NZD/USD daily chart

Moving to the hourly chart, there is a stark contrast. The RSI values are in deep, oversold territories, indicating the recent selling pressure may be overextended. This often foretells a possible price pullback or bullish correction in the near term. Regarding the MACD histogram, the green bars suggest neutral momentum, even though they are flat, indicating no significant change in the shorter term but may also hint that the bulls are gearing up.

NZD/USD hourly chart

Taking both into account, while the daily chart may hint at a generalized negative posture, the hourly chart suggests the possibility of a reprieve for the bulls very soon. The fact that the NZD/USD pair is holding above the 200-day SMA also lends some weight to this counter-trend, bullish outlook.

• NZD/USD tumbles to 0.6100 as market sentiment remains downbeat.
• Hot US CPI and PPI data for February has diminished Fed rate cut expectations for June.
• The NZ Dollar will dance to the tunes of the Q4 GDP data.

The NZD/USD pair falls vertically to the round-level support of 0.6100 in Friday’s early American session. The Kiwi asset weakens as market expectations for the Federal Reserve (Fed) reducing interest rates in the June policy meeting have diminished. This has led to a big dent in the demand for risk-sensitive assets.

The S&P 500 opens on a bearish note as investors rush for safe-haven assets amid uncertainty ahead of the Federal Reserve’s (Fed) monetary policy decision, which will be announced on Wednesday. The Fed is expected to keep interest rates unchanged in the range of 5.25%-5.50% while investors will majorly focus on the dot plot and economic projections. The US Dollar Index (DXY) consolidates in a tight range around 103.80. 10-year US Treasury yields rise to 4.31%.

Expectations for the Fed to cut interest rates are shifting to the July monetary policy meeting as consumer and producer prices remain hotter than expected in February. The situation is not favorable for the Fed to pivot to rate cuts. Fed policymakers have been reiterating that rate cuts would be appropriate only if they get confidence that inflation will sustainably return to the 2% target.

Meanwhile, the New Zealand Dollar will be guided by the Q4 Gross Domestic Product (GDP) data of 2023, which will be published later next week. The NZ economy is forecasted to have remained stagnant. The NZ economy would be considered in a technical recession if the economy contracts in the final quarter of 2023. The economy was contracted by 0.3% in the third quarter of 2023.

• NZD/USD extends losses to the psychological support of 0.6100 on Friday.
• Technical analysis suggests a bearish momentum to revisit March’s low at 0.6068.
• The key resistance zone appears around the 23.6% Fibonacci retracement level of 0.6124 and the nine-day EMA at 0.6137.

NZD/USD moves in the negative direction, extending its losses to near the psychological support of 0.6100 during the early European session on Friday. A decisive move below this level could exert downward pressure on the pair to navigate the area around March’s low at 0.6068 and a major support of 0.6050 level.

A break below the latter could lead the NZD/USD pair to revisit February’s low at 0.6037, followed by the psychological support at 0.6000. Traders will closely monitor these levels for potential shifts in market sentiment.

According to the Moving Average Convergence Divergence (MACD) analysis, a prevailing downward sentiment is indicated for the NZD/USD pair. The MACD line is positioned below both the centerline and the signal line, signaling a bearish trend. Additionally, the 14-day Relative Strength Index (RSI) is below the 50 level, providing further confirmation of the bearish sentiment.

On the upside, the NZD/USD pair could find a key barrier lies at the 23.6% Fibonacci retracement level at 0.6124, followed by the nine-day Exponential Moving Average (EMA) of 0.6137. The pair could face further resistance barriers if it climbs higher, with key levels anticipated at 0.6150, followed by the 38.2% Fibonacci retracement level of 0.6179.

NZD/USD: Daily Chart

• NZD/USD loses ground near 0.6125 amid the firmer USD.
• Strong US economic data strengthened the case for a delay in the Fed rate cuts.
• The New Zealand’s Business NZ PMI arrived at 49.3 in February vs. 47.3 prior.

The NZD/USD pair trades on a weaker note below the mid-0.6100s during the early Asian session on Friday. The downtick of the pair is driven by the strong US Producer Price Index (PPI) data. Meanwhile, the USD Index (DXY) edges higher to fresh multi-session peaks past the 103.00 barrier. NZD/USD currently trades around 0.6125, down 0.09% on the day.

On Thursday, US February Retail Sales rose 0.6% MoM from a downwardly revised -1.1% in January, worse than the expectations of a 0.8% m/m rise. The Retail Sales Control Group was flat at 0% MoM, compared to the previous reading of a 0.3% MoM decline. Furthermore, the February PPI came in better than estimated, rising 0.6% MoM in February from 0.3% MoM in January. The Core PPI figure climbed 0.3% MoM versus a 0.5% gain in January.

The upbeat US economic data followed a rise surprise in the CPI inflation report earlier this week, raising worries about disinflationary momentum in the US. The data also suggest the FOMC will maintain a cautious approach and need to see further data before lowering the interest rate. The possibility of a delay in the Federal Reserve's (Fed) monetary easing cycle boosts the Greenback and

The latest data from Business NZ showed that New Zealand’s Business NZ Performance of Manufacturing Index (PMI) came in at 49.3 in February versus 47.3 prior. The figure showed signs of improvement but was still in the contraction zone. This, in turn, continues to weigh on the Kiwi against the US Dollar.

Moving on, traders will focus on US Industrial Production and the preliminary Michigan Consumer Sentiment, due on Friday. Next week, the FOMC monetary policy meeting will be in the spotlight. Traders will take cues from the data and find trading opportunities around the NZD/USD pair.

• NZD/USD lacks any firm intraday direction on Thursday and oscillates in a narrow range.
• A modest USD uptick acts as a headwind, though the risk-on mood lends some support.
• The technical setup favours bulls and supports prospects for a further appreciating move.

The NZD/USD pair struggles to gain any meaningful traction and seesaws between tepid gains/minor losses during the Asian session on Thursday. Spot prices currently trade around the 0.6155-0.6160 region, unchanged for the day, and remain within the striking distance of over a two-week high touched last Friday.

A hot US inflation print earlier this week fuelled speculations that the Federal Reserve (Fed) may delay interest rate cuts, which keeps the US Treasury bond yields elevated. This, in turn, assists the US Dollar (USD) to attract some buyers and turns out to be a key factor acting as a headwind for the NZD/USD pair. That said, the underlying strong bullish sentiment across the global equity markets caps any further gains for the safe-haven buck and helps limit the downside for the risk-sensitive Kiwi.

From a technical perspective, spot prices hold comfortably above the very important 200-day Simple Moving Average (SMA) and now seem to have found acceptance above the 50-day SMA. Furthermore, oscillators on the daily chart have just started gaining positive traction and suggest that the path of least resistance for the NZD/USD pair is to the upside. Bulls, however, need to wait for a sustained strength beyond the 0.6200 mark before positioning for any further appreciating move.

Some follow-through buying beyond the 0.6215-0.6220 region, or the monthly peak touched last Friday, will reaffirm the bullish bias and lift the NZD/USD pair to mid-0.6200s en route to the 0.6275-0.6280 supply zone. This is closely followed by the 0.6300 mark, which if cleared decisively should pave the way for a move towards the next relevant hurdle near the 0.6340-0.6350 zone. The momentum could extend further towards the December monthly swing high, around the 0.6400 round figure.

On the flip side, the 50-day SMA, currently pegged near the 0.6145-0.6140 region, should offer some immediate support ahead of the 0.6125 zone, or the 100-day SMA. A convincing break below could make the NZD/USD pair vulnerable to weaken further below the 0.6100 mark and test the 200-day SMA, around the 0.6080 region. Failure to defend the latter will expose the YTD low, around the 0.6040-0.6035 region, before spot prices eventually drop to the 0.6000 psychological mark,

NZD/USD daily chart

• NZD/USD trades on a positive note near 0.6158 amid the softer USD. 
• Investors have lowered their bets on a 25 basis points (bps) rate cut from the Fed in June. 
• The growing fear about China's economic growth outlook undermined the China-proxy Kiwi. 
• The US February Retail Sales data will be in the spotlight on Thursday. 

The NZD/USD pair trades strongly above the mid-0.6100s during the early Asian session on Thursday. The decline of the US Dollar (USD) provides some support to the pair. The US February Retail Sales data on Thursday might offer some hints about rate-cutting expectations from the Federal Reserve (Fed) next week. The figure is expected to rise by 0.8% m/m. At press time, NZD/USD is trading at 0.6158, gaining 0.02% on the day. 

The rise in both headline and core CPI inflation earlier this week might influence the Fed to cut rates just two times this year and decrease the chance of easing policy in June. Investors have priced in 75% odds of a 25 basis points (bps) rate cut in June, down from 95% at the beginning of the week. The Fed is anticipated to keep the benchmark rate steady in the 5.25%–5.50% range in the March policy meeting next week. The Fed wants to see more evidence that recent disinflation progress is sustainable before starting the policy-easing process.

On the Kiwi front, the growing fear about China's economic growth outlook and the lack of supporting measures from Chinese authorities dampen commodity demand, which exerts some selling pressure on the China-proxy New Zealand Dollar (NZD) and caps the pair’s upside. 

Later on Thursday, investors will closely watch the US Retail Sales for February. The stronger-than-expected data might lift the Greenback against its rivals. On Friday, New Zealand’s Business NZ Performance of Manufacturing Index (PMI) for February will be released. Next week, the Federal Open Market Committee's (FOMC) monetary policy meeting will take center stage. 

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• NZD/USD generates moderate gains as the US Dollar drops despite easing Fed rate cut expectations for June.
• The RBNZ has projected that inflation will rise by 0.8% in the first quarter of this year.
• Investors await the US Retail Sales data for fresh guidance.

The NZD/USD pair is slightly up by 0.08% at 0.6160 in Wednesday’s early American session. The Kiwi asset is broadly sideways as investors shift focus to the United States Retail Sales data for February, which will be published on Thursday. The Retail Sales will indicate the strength in households’ spending, which feeds the consumer price inflation.

The US Dollar is inches down to 102.80 despite easing expectations for the Federal Reserve (Fed) to reduce interest rates in the June policy meeting. The CME Fedwatch tool shows that traders see a 65% chance for the Fed to announce rate cuts in June, which was above 72% before the release of February’s inflation report.

Meanwhile, easing New Zealand inflation expectations are expected to bring some relief for households. Latest forecasts from the Reserve Bank of New Zealand (RBNZ) show that consumer prices will rise by 0.8% in the quarter to March period. The annual inflation is projected to decline to 4.2% from 4.7% in the last quarter of 2023. The RBNZ is expected to keep interest rates higher for longer as current price pressures are significantly higher than the desired rate of 2%.

NZD/USD trades back and forth from almost two months, ranging between 0.6037-0.6218 on a four-hour timeframe. A prolonged consolidation indicates indecisiveness among market participants.

The 14-period Relative Strength Index (RSI) trades in a 40.00-60.00 range, which indicates a sharp volatility contraction.

Going forward, a downside move below February 13 low near 0.6050 would 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 retraces some of its recent losses, trading above 0.6160. Economists at ING analyze the pair’s outlook.

Kiwi may suffer from a small USD comeback in the short run

• NZD/USD bounces back to 0.6160 as risk sentiment improves.
• Stubborn US inflation data have dented market expectations for Fed rate cuts in June.
• The consumer price inflation in the NZ economy in Q12024 is expected to rise by 0.8%.

The NZD/USD pair extends recovery to 0.6160 in Wednesday’s early European session. The Kiwi asset rises as upbeat market sentiment improves demand for risk-perceived assets.

S&P 500 futures added nominal gains in the early London session. The US Dollar Index (DXY) remains sideways slightly below 103.00. 10-year US Treasury yields have dropped to 4.14%. However, risk-sensitive assets could be under pressure as market expectations for the Federal Reserve (Fed) reducing interest rates in the June policy meeting have eased significantly.

The CME FedWatch tool shows that there is a 34% chance that the Fed will keep interest rates unchanged in the 5.25%-5.50% in June. The expectations for the Fed keeping interest rates on hold rose from Tuesday’s 28% chance after the release of hotter-than-expected Consumer Price Index (CPI) data for February.

Fed policymakers are expected to keep interest rates higher for a longer period as they have not gotten any evidence that could build confidence that inflation will return sustainably to the 2% target.

Going forward, investors will shift focus to the United States Producer Price Index (PPI) and the Retail Sales data, which will be published on Thursday.

On the New Zealand Dollar front, easing inflation expectations are expected to bring some relief for households. Latest forecasts from the Reserve Bank of New Zealand (RBNZ) show that consumer prices will rise by 0.8% in the quarter to March period. The annual inflation is projected to decline to 4.2% from 4.7% in the last quarter of 2023.

• 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.