NZD/USD Price Forecast: Flirts with ascending trend-line near 0.5900 as traders eye RBNZ

NZD/USD turns lower as rising Fed rate hike bets and US-Iran tensions revive USD demand.
The downside seems cushioned as traders seem hesitant ahead of the RBNZ on Wednesday.
A break below an ascending trend-line support is needed to back the case for deeper losses.

Haresh Menghani FXStreet

The NZD/USD pair attracts some sellers following a modest intraday uptick to the 0.5930 region and languishes near the lower end of its daily range during the early European session on Tuesday. Bearish traders now await a break below the 0.5900 mark before positioning for an extension of the recent pullback from the vicinity of the 0.6000 psychological mark, or a three-month high touched in August.

The US Dollar (USD) regains positive traction as traders continue to price in a greater chance of a US Federal Reserve (Fed) rate hike in September amid inflation risks stemming from rising energy prices. Adding to this, a further escalation of tensions between the US and Iran is seen as another factor underpinning the safe-haven Greenback, exerting some downward pressure on the NZD/USD pair.

The downside, however, seems cushioned as traders might refrain from placing aggressive bets and opt to wait for the Reserve Bank of New Zealand (RBNZ) policy meeting on Wednesday. The focus will then shift to the closely watched US monthly jobs data, popularly known as the Nonfarm Payrolls (NFP) report on Friday. Apart from this, geopolitical headlines should provide some impetus to the NZD/USD pair.

From a technical perspective, an intraday breakdown below the 100-period Simple Moving Average (SMA) on the 4-hour chart could be seen as a key trigger for bearish traders. Moreover, the Moving Average Convergence Divergence (MACD) indicator remains marginally below zero and the Relative Strength Index (RSI) hovers in the mid-30s, which together hint at fading bullish momentum after the latest recovery.

However, the NZD/USD pair is holding above the 200-period SMA at 0.5876, leaving the near-term bias neutral but capped by nearby overhead supply. Furthermore, the upward-sloping trend-line reference around 0.5900 still underpins price action, making it prudent to wait for a break below the said handle before positioning for a slide to the 200-period SMA at 0.5876, where buyers could defend the broader uptrend.

On the topside, initial resistance is defined by the 100-period SMA at 0.5915, and a sustained break above this barrier would be needed to re-open a more constructive path for the NZD/USD pair.

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

NZD/USD 4-hour chart

Economic Indicator

RBNZ Interest Rate Decision

The Reserve Bank of New Zealand (RBNZ) announces its interest rate decision after each of its seven scheduled annual policy meetings. If the RBNZ is hawkish and sees inflationary pressures rising, it raises the Official Cash Rate (OCR) to bring inflation down. This is positive for the New Zealand Dollar (NZD) since higher interest rates attract more capital inflows. Likewise, if it reaches the view that inflation is too low it lowers the OCR, which tends to weaken NZD.

Why it matters to traders?

The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by interim Governor Christian Hawkesby's press conference.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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