NZD/USD Price Forecast: Strengthens above 0.5950, with bullish technical backdrop
- NZD/USD trades in positive territory near 0.5960 in Friday’s early European session.
- Economists expect the RBNZ to hike on September 2, a Reuters poll showed.
- The pair keeps a positive tone above the 100-day SMA, with bullish RSI momentum.
- The first downside target to watch is 0.5910; the critical upside barrier emerges in the 0.5990-0.6000 region.
The NZD/USD pair gathers strength to around 0.5960 during the early European trading hours on Friday. The New Zealand Dollar (NZD) edges higher against the US Dollar (USD) on a hawkish tone from the Reserve Bank of New Zealand (RBNZ).
According to a Reuters poll surveyed between August 20 and 27, 90% of economists or 27 of 31 expect the RBNZ to hike rates by 25 basis points (bps) to 2.75% at its upcoming September policy meeting, with two-thirds seeing at least one more rate increase this year, taking the Official Cash Rate (OCR) to 3.0% or higher by December.
Last month, the New Zealand central bank raised the OCR for the first time in more than three years, alongside a signal of further tightening ahead aimed at returning inflation to its 1%-3% target range.
Traders could hold back from making big bets ahead of Federal Reserve (Fed) Chair Kevin Warsh’s speech at Jackson Hole, which could offer fresh clues on the path for US interest rates. However, any hawkish comments from Fed officials could underpin the Greenback and cap the upside for the pair in the near term.
Kiwi positioning resets as markets lean toward another RBNZ hike
According to TD Securities, the July move from the RBNZ marked a clear inflection point for positioning in the Kiwi. Strategists note that “since the hawkish July RBNZ rate hike, FX market has sharply pared back its short NZD positioning vs both the USD and AUD.” They add that subsequent “NZ data releases since then have not provided enough evidence for market pricing to deviate from the RBNZ's latest OCR guidance.” In this context, TD Securities highlight that “as a result, consensus continues to expect another RBNZ rate hike at the upcoming meeting.”
Hammack leans more hawkish as inflation persistence prompts call to act
Fed’s Hammack delivered a distinctly hawkish message, with an 8/10 FXS Speechtracker score that is modestly stronger relative to the historical average of 7.5/10, stressing that “now is time to act” given persistent above-target inflation. The emphasis that recent inflation was “as expected,” that policy is not yet providing meaningful restriction, and that an inflationary mindset may be forming—alongside a belief that the neutral rate is on the higher side—collectively argues for additional tightening or a higher-for-longer stance. Warnings about public confidence in the 2% goal and contacts’ concern over the cost of living reinforce a bias toward further restraint rather than early relief for the Dollar funding backdrop.
The FXS Fed Sentiment Index rose by 0.51 points to 131.55, underscoring a solidly hawkish shift in the policy tone captured by the FXS Speechtracker. With the index well above the 100 neutral line, markets are likely to interpret Hammack’s remarks as supportive of higher-for-longer rate expectations and, by extension, broadly constructive for the Dollar against lower-yielding peers.
Technical Analysis: NZD/USD retains a constructive tone above the 100-day SMA
In the daily chart, NZD/USD holds above both the 20-day Bollinger simple moving average and the 100-day moving average, keeping the near-term bias constructive while it grinds higher within the upper half of its Bollinger envelope. A firming 14-day Relative Strength Index around 63 suggests persistent bullish momentum, though not yet at outright overbought conditions, hinting that upside pressure could persist while price remains supported above the recent moving-average floor.
On the downside, initial support emerges at the Bollinger middle band close to 0.5910, ahead of the 100-day moving average near 0.5845 and the lower Bollinger band around 0.5830, where a deeper pullback would be expected to attract dip-buying interest. On the topside, the immediate hurdle is the upper Bollinger band near 0.5990; a daily close above this barrier would open the door to an extension of the advance, whereas repeated failure there would warn of consolidation or a corrective pause back toward the 0.5910 area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Nothing in this material constitutes investment advice, personal recommendation, investment research, an offer, or a solicitation to buy or sell any financial instrument. The content has been prepared without consideration of your individual investment objectives, financial situation, or needs, and should not be treated as such.
Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
Mitrade makes no representation or warranty as to the accuracy or completeness of the information provided and accepts no liability for any loss arising from reliance on such information.
Recommended Articles
