Nzdusd falls 0.5% as New Zealand lowers official cash rate

NZDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.5%	-30.3 Pips
Week to-date	-4.48%	-284.4 Pips
October	-4.41%	-279.9 Pips

Upcoming key events (London Time)

Thu 01:30 PM USD CPI Inflation Rate (12-mth)
Fri 01:30 PM USD Producer Price Index (12-mth)

What happened lately

In New Zealand, the Reserve Bank of New Zealand’s decision to lower the Official Cash Rate from 5.25% to 4.75% marks a significant monetary policy shift aimed at stimulating the economy. Such a decrease may be indicative of attempts to bolster economic activity by encouraging borrowing and investment through lower interest rates. This move could suggest concerns over economic growth prospects or inflationary pressures in New Zealand. The decision is likely calculated to support domestic economic stability amidst global economic uncertainties and challenges such as fluctuating global demand, recent trade agreements, or other international economic dynamics.

For the United States, upcoming high-impact economic events include the Consumer Price Index (CPI) Inflation Rate scheduled for Thursday and the Producer Price Index (PPI) for Friday. Both of these indicators offer insights into inflationary pressure within the economy. The CPI reflects changes in purchasing trends and price fluctuations from the perspective of consumers, while the PPI offers insight from the standpoint of producers. Any significant deviations from expected inflation rates could influence Federal Reserve policy adjustments, affecting domestic and international market sentiments regarding the US dollar.

Regarding the NZDUSD currency pair, the reduction of New Zealand’s Official Cash Rate has already led to a 0.5% depreciation, pushing the rate to 0.60654. This decline can be partly attributed to investors’ perception of a softer economic outlook in New Zealand and a possibly more dovish monetary policy stance. The relatively lower interest rate could reduce returns on investments denominated in New Zealand dollars, resulting in weaker demand for the currency. Concurrently, attention will shift to forthcoming US inflation data, where strong figures could bolster the US dollar if they heighten expectations for a rate hike by the Federal Reserve. Investors will closely monitor these developments, as further such influences might exacerbate or mitigate the current downward trend of the NZDUSD rate.

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What can we expect from NZDUSD today?

NZDUSD on Wednesday dropped -0.5% to 0.60654. Price is below 9-Day EMA while Stochastic is falling in oversold zone.

Updated daily direction for NZDUSD looks bearish as the pair posted lower in Wednesday trading session.

Looking ahead for the day, immediate support level is at S1 0.60317 with break below could see further selling pressure towards S2 at 0.5998. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.61377 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.60510 would indicate selling pressure.

For the week to-date, take note that NZDUSD is bearish as the pair posted lower by -4.48%.

Key levels to watch out:

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