The New Zealand dollar is currently on the rise against the US dollar, with the NZD/USD pair reaching 0.6014 as of Monday. Market analysts are gearing up for the upcoming Reserve Bank of New Zealand (RBNZ) meeting, with expectations that the official cash rate will remain at 5.5% for the ninth consecutive time. This decision reflects concerns about the strength of New Zealand’s economy, despite recent mixed economic data releases.
Economic Factors Driving Rate Expectations
Recent data has shown a less-than-expected increase in the unemployment rate in New Zealand for Q2, while inflation expectations for Q3 have dipped to a three-year low. These factors have strengthened the case for potential rate cuts, although it is unlikely that the RBNZ will adjust rates in August. The central bank may prefer to wait for signals from global central banks before making any changes. Investor focus is also shifting towards upcoming US inflation data, which could impact global monetary policy expectations, particularly Federal Reserve decisions.
Technical Analysis and Predictions
Looking at technical analysis of the NZD/USD pair, there is a consolidation range forming just above the 0.5983 level. It is expected that this range will extend to 0.6050, indicating a corrective move in the market. Following this correction, there is a potential for a downward trend towards 0.5920, with the possibility of further decline to 0.5800. The bearish outlook is supported by indicators such as the MACD, which points downwards despite being above zero, signaling potential selling pressure.
On the hourly chart, the NZD/USD pair is in the fifth segment of a growth wave targeting 0.6050, considered a corrective rally. Once this level is reached, a reversal is anticipated, leading to a decrease towards 0.5983 and potentially extending the downtrend to 0.5920. The bearish scenario is also reinforced by the Stochastic oscillator, which currently has its signal line positioned above 80 but shows signs of an impending downturn.
While the New Zealand dollar has shown resilience in the face of challenges in July and August, the future remains uncertain. The upcoming RBNZ meeting and global economic factors will play a significant role in determining the currency’s trajectory in the coming months.