- NZD/USD continues to trade around the 0.6950 mark having recovered from earlier lows under 0.6920.
- Though the pair is down more than 3.0% on the month, technicals do not suggest the kiwi is reaching oversold levels just yet.
NZD/USD has seen fairly choppy trading conditions on Tuesday, with the pair down as much as 0.5% when it hit session lows under 0.6920, before rebounding back to the 0.6950 mark since the arrival of US market participants. At current levels around 0.6950, the kiwi is trading flat on the day versus the US dollar. Trading conditions have died down in recent hours as NZD traders refrain from placing any further big bets ahead of Wednesday’s RBNZ monetary policy decision.
Technicals not coming to kiwi’s aid just yet
Since the start of the month, NZD/USD has dropped 3.0%. Failing a much larger hike than expected from the RBNZ at Wednesday’s meeting (of 50bps rather than 25bps) coupled with hawkish guidance on future rate hikes, the prospect for the pair recouping these losses is slim. Indeed, if the bank does opt to go with a 25bps rate hike and fail to impress markets with their guidance, a move back to session lows in the 0.6920 region and perhaps of the big figure just below it.
Technicals are unlikely to come to the kiwi’s aid just yet. NZD/USD’s 14-day Relative Strength Index score is at roughly 37.7, still above oversold territory (defined as 30 or lower). Meanwhile, NZD/USD’s Z-score to its 200-day moving average (i.e. the number of standard deviations away from the moving average) clocks in at -1.24. While this is in the bottom quartile of rolling Z-scores to the 200DMA recorded over the last five-year period, it doesn’t yet signal oversold conditions.
Typically, a Z-score to the 200DMA of under -2.00 is a better buy signal – this has been the case already on two occasions in 2021 (in mid-August and late-September). For NZD/USD’s Z-score to hit -2.00, the pair would need to fall back to roughly in line with the late-September low a few pips above 0.6950.
Westpac remains bullish on the pair in the medium-term, given that “global risk sentiment remains elevated, and NZ-US yield spreads remain attractive, while NZ commodity prices are rising”. The bank continues “to watch for this decline to run its course, and target a return to the Feb high of 0.7465+ by Q1 next year”.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.