NZD/USD Price Forecast: Sees more downside as short-to-long-term EMAs slope downwards

NZD/USD slumps to near 0.5725 as the New Zealand Dollar underperforms its peers.
The RBNZ is expected to reduce its interest rates further this year.
Easing US-China trade tensions support the US Dollar.

Sagar Dua FXStreet

The NZD/USD pair declines 0.27% to near 0.5725 during the Asian trading session on Tuesday. The Kiwi pair faces selling pressure as the New Zealand Dollar (NZD) underperforms across the board amid growing acceptance among investors that the Reserve Bank of New Zealand (RBNZ) will loose its monetary policy further to support downside inflation risks.

New Zealand Dollar Price Today

The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the weakest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.06%	0.11%	0.20%	0.09%	0.18%	0.28%	0.05%
EUR	-0.06%		0.05%	0.14%	0.03%	0.13%	0.23%	-0.00%
GBP	-0.11%	-0.05%		0.08%	-0.02%	0.08%	0.19%	-0.06%
JPY	-0.20%	-0.14%	-0.08%		-0.12%	-0.02%	0.07%	-0.14%
CAD	-0.09%	-0.03%	0.02%	0.12%		0.09%	0.20%	-0.04%
AUD	-0.18%	-0.13%	-0.08%	0.02%	-0.09%		0.10%	-0.15%
NZD	-0.28%	-0.23%	-0.19%	-0.07%	-0.20%	-0.10%		-0.23%
CHF	-0.05%	0.00%	0.06%	0.14%	0.04%	0.15%	0.23%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).

Stats New Zealand (NZ) showed on Monday that the headline Consumer Price Index (CPI) rose by 3% on an annualized basis, as expected, faster than the prior reading of 2.7%. However, the increased CPI growth was led by one-time and seasonal items, including an 8.8% jump in local government land taxes, a Bloomberg report showed.

Meanwhile, the underlying price trend continued to cool down, paving the way for further monetary policy easing in the near term.

Secondly, higher US Dollar (USD) due to easing United States (US)-China trade frictions and likely reopening of federal shutdown has also weighed on the Kiwi pair.

This week, investors will keenly focus on the delayed US CPI data for September, which is scheduled for Friday.

NZD/USD holds its over six-month low around 0.5740. The overall trend of the Kiwi pair is bearish as all short-to-long-term Exponential Moving Averages (EMAs) slope downwards.

The 14-day Relative Strength Index (RSI) stays below 40.00, suggesting a strong bearish momentum.

Going forward, the asset could slide towards the April 10 low of 0.5628 and the round-level support of 0.5600, if it breaks below the October 14 low of 0.5682.

In an alternate scenario, the Kiwi pair would rise towards the June 19 high of 0.6040 and the September 11 low of 0.6100 if it manages to break above the psychological level of 0.6000.

NZD/USD daily chart

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by Statistics New Zealand on a quarterly basis, measures changes in the price of goods and services bought by New Zealand households.The CPI is a key indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference quarter to the same quarter a year earlier. A high reading is seen as bullish for the New Zealand Dollar (NZD), while a low reading is seen as bearish.

Why it matters to traders?

With the Reserve Bank of New Zealand's (RBNZ) inflation target being around the midpoint of 2%, Statistics New Zealand’s quarterly Consumer Price Index (CPI) publication is of high significance. The trend in consumer prices tends to influence RBNZ’s interest rates decision, which in turn, heavily impacts the NZD valuation. Acceleration in inflation could lead to faster tightening of the rates by the RBNZ and vice-versa. Actual figures beating forecasts render NZD bullish.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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