NZD/USD: Coming up for air on 0.65 handle and treading water


  • NZD/USD outperforming in upside correction.
  • Eyes on Fed this week.

NZD/USD is currently trading higher by 0.19% at 0.6503 during the time of writing, with the price travelling within a range of 0.6491 and 0.6514, battling against a strong daily downtrend that commenced from the 0.6680s, (which was a 50% retracement of the late March downtrend from the 0.69 handle. On Friday, the bird was the underperformer, falling from 0.6540 to 0.6489  to a three-week low. While U.S. data, (strong retail sales numbers), was a catalyst for a spike in the greenback on Friday, central bank's and geopolitics have been the main drivers on a fundamental basis for this pair. 

RBNZ and the Fed

The Reserve Bank of New Zealand, for instance, have set the Official Cash Rate at 1.5% and probably welcome a weaker bird considering the global macro backdrop and higher chances of another economic downturn. Analysts at ANZ Bank New Zealand expect the RBNZ to reduce the OCR by a further 0.25% and to provide strong forward guidance that rate hikes are a very distant prospect. On the flipside, the Federal Reserve has also shifted towards an easing bias and is expected by the market to cut interest rates later this year, but not as soon as this week. 

"With trade tensions likely to escalate, this Wednesday’s Fed meeting looks set to confirm market expectations - precautionary interest rate cuts are coming,"

analysts at ING Bank explained. 

This is where geopolitics is playing its co-piloting role in the cockpit, with the Fed at the wheel.  The analysts at ING bank note that the concerns about the economic implications of President Trump’s willingness to use trade tariffs in disputes with other countries mean that downside risks to growth are building. "On Wednesday, we expect the Fed to signal precautionary rate cuts are in the offing. Markets favour a 25bp rate cut in July with three additional rate cuts over the next twelve months."

NZD/USD levels

The bird has recovered marginally from a strong sell off and bears have rejected bullish attempts above 0.65 the figure. The 0.6480s guard a run to the Oct 2018 lows in the 0.6420s whereby a 127% extension comes in at the 0.6270s, in line with Autumn 2015 levels. Both long-term and short-term stochastics are oversold and some consolidation could be expected. On a break of 0.6550, a 50% mean reversion to 0.6580 could be on the cards. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD hits fresh one-month low amid souring market mood

EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points. 

EUR/USD News

GBP/USD retreats toward 1.36 amid fresh dollar strength

GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown. 

GBP/USD News

Gold extends sideways grind near $1,850

The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.

Gold news

Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed

Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative. 

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News

Forex MAJORS

Cryptocurrencies

Signatures