The Kiwi dollar will clear the 0.5700 level on Friday and is still up over 0.22% against the US dollar after hitting an intraday low of 0.5689. At the time of writing, the NZD/USD rate is 0.5709.
NZD/USD Price Forecast: Technical Outlook
The NZD/USD currency pair remains technically bearish, although interest rate probabilities suggest the Reserve Bank of New Zealand could raise rates at least twice. However, in the miniature term, the rally will be a test of resistance reversed from the trendline support at around 0.5750.
The Relative Strength Index (RSI) is rising, suggesting buyers are gaining strength, but remains below the neutral level of 50. The overall trend is therefore down.
For a bullish reversal to occur, the NZD/USD pair needs to break through the 0.5750 level and then reach the 0.5800 level. Above this level, the next resistance is the 200-day uncomplicated moving average (SMA) at 0.5821, followed by the 50-day SMA at 0.5831 and the 100-day SMA at 0.5851. Once these levels are cleared, the next resistance will be the milestone 0.5900 level.
On the other hand, if NZD/USD breaks below the current low of the day (LOD) at 0.5689, the next support will be 0.5650 and then 0.5600.
NZD/USD Price Chart – Technical Outlook
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known currency among investors. Its value is largely determined by the condition of the New Zealand economy and the policy of the country’s central bank. That said, there are some unique features that can also cause the NZD to move. The performance of the Chinese economy tends to move Kiwis because China is New Zealand’s largest trading partner. Bad news for the Chinese economy is likely to mean fewer New Zealand exports to the country, which hits the economy and therefore the currency. Another factor influencing NZD is dairy prices, as the dairy industry is New Zealand’s main export. High dairy product prices augment export earnings, positively impacting the economy and therefore NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate of 1% to 3% over the medium term, with particular emphasis on keeping it close to the average level of 2%. For this purpose, the bank sets the appropriate level of interest rates. When inflation gets too high, the RBNZ will raise interest rates to frigid the economy, but this move will also push up bond yields, making it more attractive for investors to invest in the country and therefore strengthening New Zealand’s currency. On the contrary, lower interest rates tend to weaken NZD. The so-called interest rate differential, which is how New Zealand rates are or are expected to be compared to those set by the US Federal Reserve, could also play a key role in the movement of the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assessing the state of the economy and may impact the valuation of the New Zealand dollar (NZD). A forceful economy, underpinned by high economic growth, low unemployment and high confidence, benefits NZD. High economic growth attracts foreign investment and may prompt the Reserve Bank of New Zealand to raise interest rates if this economic strength is accompanied by increased inflation. Conversely, if economic data is faint, NZD will likely lose value.
The New Zealand dollar (NZD) tends to strengthen during periods of increased risk or when investors perceive that broader market risk is low and are bullish about growth. This tends to lead to a more favorable outlook for commodities and so-called “commodity currencies” such as the kiwi. On the other hand, NZD tends to weaken during periods of market turmoil or economic uncertainty as investors tend to sell higher risk assets and flee to more stable secure havens.
