New Zealand Dollar Hits Five-Month Low Against Strong US Dollar
Andrey Goilov | Apr 16, 2024 05:30AM ET
The New Zealand dollar has plummeted to a five-month low, with the NZD/USD pair touching the 0.5890 mark. This decline was triggered by the release of robust American retail sales data, which raised concerns that the Federal Reserve might delay interest rate cuts expected in 2024.
The prevailing expectation in the stock market is that the Fed will begin its monetary policy easing cycle in September, diverging from the earlier forecast of June. This expectation adjustment has bolstered the US dollar's position, exerting additional pressure on other currencies.
The Reserve Bank of New Zealand (RBNZ) has maintained its interest rate steady for six consecutive meetings, including a neutral stance in its April meeting. The central bank's primary objectives are alleviating production capacity pressures and mitigating inflation's economic impact. Despite signs of weakening economic activity, New Zealand's annual inflation rate dropped to 4.7% in the quarter ending December – the lowest since Q2 2021. However, inflation remains significantly above the RBNZ's 1-3% target range.
There are indications that the New Zealand economy entered a technical recession in Q3 2023, with more recent data still awaited.
Technical analysis of NZD/USD
On the H1 chart, the NZD/USD pair continues its downward trajectory towards 0.5854. After completing the decline to 0.5872, a corrective movement to 0.5900 is likely. Subsequently, a new downward phase could target 0.5854, potentially extending towards 0.5830. This outlook is confirmed by the Stochastic oscillator, currently below 20, with an expected rise to 50, indicating the potential for a temporary corrective upswing before continuing the downward trend.
By RoboForex Analytical Department
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