NZD/USD on Cusp of Testing September Low Ahead of RBNZ Rate Decision

New Zealand Dollar Outlook: NZD/USD

NZD/USD is on the cusp of testing the September low (0.6107) as it slips to a fresh monthly low (0.6108), and the Reserve Bank of New Zealand (RBNZ) meeting may keep the exchange rate under pressure as the central bank is expected to lower the official cash rate (OCR) for the second time this year.

NZD/USD on Cusp of Testing September Low Ahead of RBNZ Rate Decision

Keep in mind, the recent selloff in NZD/USD emerged following the failed attempt to test the July 2023 high (0.6412), with the weakness in the exchange rate keeping the Relative Strength Index (RSI) out of overbought territory.

In turn, NZD/USD may struggle to retain the advance from the yearly low (0.5850) as the RSI falls to its lowest level since August, and the RBNZ meeting may drag on the New Zealand Dollar as the central bank is expected to implement a 50bp rate cut.

New Zealand Economic Calendar

It seems as though the RBNZ will continue to alter the course for monetary policy as the central bank projects ‘the OCR to decline over time,’ and it remains to be seen if Governor Adrian Orr and Co. will further unwind its restrictive policy at its last meeting for 2024 as ‘the OCR needs to decline sooner than previously assumed, in order for inflation to sustainably settle at the 2 percent target midpoint in the medium term.’

With that said, NZD/USD may continue to carve a series of lower highs and lows should the RBNZ retain a dovish forward guidance, but the exchange rate may attempt to retrace the decline from the start of the month if the central bank delivers a hawkish rate cut.

NZD/USD Price Chart – Daily

Chart Prepared by David Song, Strategist; NZD/USD on TradingView

NZD/USD extends the decline from the September high (0.6379) to mark the longest selloff since August 2023, with a breach below the September low (0.6107) raising the scope for a move towards 0.6070 (61.8% Fibonacci extension).
A break/close below the 0.5910 (61.8% Fibonacci extension) to 0.5960 (23.6% Fibonacci retracement) region opens up the yearly low (0.5850) but NZD/USD may stage a rebound should it defend the September low (0.6107).
Need a move above the weekly high (0.6213) for NZD/USD to negate the bearish price series, with a break/close above the 0.6220 (50% Fibonacci extension) to 0.6270 (38.2% Fibonacci retracement) bringing the monthly high (0.6351) on the radar.

Additional Market Outlooks

US Dollar Forecast: USD/CAD Rally Eyes September High

AUD/USD Forecast: RSI Continues to Move Away from Overbought Zone

EUR/USD Vulnerable on Close Below 50-Day SMA

USD/JPY Outlook Mired by Negative Slope in 50-Day SMA

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.