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

Article By: ,  Strategist
November 25, 2024 9:22 PM

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.

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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

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