NZD/USD Rebounds Ahead of 2023 Low with RBNZ Expected to Cut

New Zealand Dollar Outlook: NZD/USD

NZD/USD bounces back ahead of the 2023 low (0.5774) to keep the Relative Strength Index (RSI) above 30, but the Reserve Bank of New Zealand (RBNZ) rate decision may drag on the exchange rate as the central bank is expected to deliver a 50bp rate-cut.

NZD/USD Rebounds Ahead of 2023 Low with RBNZ Expected to Cut

NZD/USD no longer carves a series of lower highs and lows as it recovers from a fresh yearly low (0.5817), and the RSI may show the bearish momentum abating as it moves away from oversold territory.

Join David Song for the Weekly Fundamental Market Outlook webinar.

New Zealand Economic Calendar

In turn, NZD/USD may attempt to further retrace the decline from the monthly high (0.6038) as it halts a three-day selloff, but the RBNZ meeting may undermine the rebound in the exchange rate as the central bank is anticipated to lower the official cash rate (OCR) to 4.25% from 4.75%.

Source: RBNZ

At the same time, the RBNZ may prepare households and businesses for lower interest rates in 2025 as ‘economic activity in New Zealand is subdued, in part due to restrictive monetary policy,’ and Governor Adrian Orr and Co. may project a lower trajectory for the OCR as the central bank is scheduled to update its quarterly Monetary Policy Statement (MPS).

With that said, a 50bp RBNZ rate-cut along with a dovish forward guidance may produce headwinds for the New Zealand Dollar, but NZD/USD may stage a larger recovery should the central bank show a greater willingness to unwind its restrictive policy at a slower pace.

NZD/USD Price Chart – Daily

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

NZD/USD clears the recent series of lower highs and lows to hold above the 2023 low (0.5774) with a move back above the 0.5910 (61.8% Fibonacci extension) to 0.5960 (23.6% Fibonacci retracement) region raising the scope for a move the monthly high (0.6038).
Next area of interest comes in around 0.6070 (61.8% Fibonacci extension) but NZD/USD may stage further attempts to test the 2023 low (0.5774) if it fails to hold within last week’s range.
A break/close below the 0.5740 (78.6% Fibonacci retracement) to 0.5760 (100% Fibonacci extension) region opens up the 2022 low (0.5512), with the next area of interest coming in around 0.5460 (78.6% Fibonacci extension).

Additional Market Outlooks

US Dollar Forecast: USD/CAD to Face Uptick in US PCE Index

Gold Price Stages Five-Day Rally for First Time Since March

US Dollar Forecast: USD/CHF Rally Eyes July High

GBP/USD Selloff Pushes RSI Up Against Oversold Zone

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.