New Zealand Dollar - The NZD/USD currency pair has seen a modest recovery after hitting a new low of around 0.5930 since November 2022 during the Asian session on Wednesday. This is a response to the hawkish outlook from the Reserve Bank of New Zealand (RBNZ). Currently, the spot price of NZD/USD is trading in the range of 0.5960-0.5965, reflecting an increase of 0.20% today. For now, it seems that the downward trend over the past six days has halted.

As previously predicted, the RBNZ decided to keep its monetary policy unchanged and maintain the Official Cash Rate (OCR) at 5.50%. In the monetary policy statement released, the central bank indicated that it would maintain interest rates at this level for a considerable period.

Additionally, the central bank is currently projecting the OCR to remain at 5.5% until December 2024, before declining to 3.38% by September 2026. This projection provides some support to the New Zealand Dollar (NZD), prompting some short position closures in the NZD/USD pair, particularly against the backdrop of weak price action from the US Dollar (USD).

However, the rise in the NZD/USD pair remains limited, at least for now, as traders seem reluctant to take aggressive betting positions and prefer to wait for the release of the FOMC (Federal Open Market Committee) meeting minutes.

The market anticipates that the Federal Reserve (Fed) will halt interest rate hikes at this month’s policy meeting, although a 25 bps increase is still possible by the end of the year. Therefore, the FOMC meeting minutes will be closely monitored for clues regarding future Fed interest rate policies. These clues will influence USD price movements and provide a new direction for the NZD/USD pair.

From a technical perspective, the recent break below this year’s low—just under the psychological level of 0.6000—is viewed as a new signal for bearish traders. However, the slightly oversold Relative Strength Index (RSI) on the daily timeframe helps the NZD/USD pair to hold and rebound from the lower end of the downward channel that has persisted for nearly three weeks.

Significant support is currently located around the 0.5930-0.5925 area, which will be a crucial point. If this support is breached decisively, it could open the door for further declines that have occurred over the past month.

On the other hand, any potential market recovery will face strong resistance near the previous highs, just above the psychological level of 0.6000. If market strength can sustain above this level, a short-covering rally is likely to push the NZD/USD pair toward the intermediate barrier at the 0.6040 level on its way to the 0.6065-0.6070 area.

The latter region coincides with the barrier at the rising channel. If this barrier can be decisively breached, it could eliminate the possibility of negative sentiment and shift the short-term orientation currently favoring bullish positions.

Thus, the NZD/USD pair could surge higher, targeting the psychological level of 0.6100, and potentially reach the monthly swing high in the 0.6130-0.6135 area.


Warning!

This analysis is based on fundamental and technical perspectives from reliable sources and is not intended as advice or solicitation. Always remember that the content aims to enrich readers' information. Always conduct independent research on other forex information as a reference for your trading.

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