New Zealand Dollar steadies off two-week lows following dovish RBNZ survey

• NZD/USD recovers to the mid-0.5800s after sliding to its lowest levels of the week.
• New Zealand's RBNZ inflation expectations eased, adding to the dovish case for the Kiwi.
• A softer US Dollar after this week's cooling data is cushioning the pair.

NZD/USD is recovering on Thursday in the American session, regaining the mid-0.5800s after rising off two-week lows reached during the Asian session. The New Zealand Dollar (NZD) has clawed back some ground as the US Dollar (USD) lost momentum.

A survey from the Reserve Bank of New Zealand (RBNZ) showed inflation expectations easing in the third quarter, slipping to 2.34% from 2.53% previously. Cooler expectations give the central bank less reason to tighten policy and add to the dovish backdrop for the Kiwi.

Offsetting that, the Greenback is on the back foot after soft US producer prices and a rise in weekly Initial Jobless Claims cooled bets on further Federal Reserve (Fed) tightening.

The risk-sensitive Kiwi remains exposed to the cautious mood surrounding Middle East tensions, however, which has kept a lid on its attempts to rebound.

With little on the domestic calendar ahead, direction looks set to come from the US side, leaving Friday's Retail Sales and Michigan Consumer Sentiment figures as the next tests for the pair.

Brown Brothers: RBNZ credibility supports case for further hikes

Brown Brothers Harriman’s Elias Haddad highlights that “overall, inflation expectations remain close to the RBNZ 2% target midpoint for inflation, underscoring the bank’s credibility.” At the same time, he argues that “nonetheless, above target inflation, more favorable domestic growth outlook, and a policy rate near the lower-end of the RBNZ’s neutral range (2.20%-4.10%) argue for additional RBNZ rate hikes,” reinforcing the case for further policy tightening despite well-anchored expectations.

Short-term technical analysis:

On the 4-hour chart, NZD/USD trades at 0.5851, holding a mildly bearish near-term tone as it slips below the 20-period Simple Moving Average (SMA) at 0.5864 while remaining only marginally above the 100-period SMA at 0.5843. The Relative Strength Index (RSI) around 43 leans soft but not oversold, hinting that sellers retain control though downside momentum is moderate rather than aggressive.

On the topside, initial resistance emerges at 0.5853 and 0.5858, forming a nearby cap ahead of the 20-period SMA at 0.5864, while stronger barriers align at 0.5907 and 0.5930, with 0.5965 higher up. On the downside, immediate support is seen just under the market at 0.5845, reinforced by the 100-period SMA at 0.5843 and the horizontal floor at 0.5842, where a break would likely extend the corrective phase.

(The technical analysis of this story was written with the help of an AI tool. Know more.)