NZDUSD Threatens to Break Below 0.60

The NZD/USD pair has traded within a range for most of 2024. However, traders are now driving the price below 0.60 after it broke the bottom of the range at 0.61, pressured by various fundamentals. For several months, the pair was stuck between daily moving averages, influenced by the similar monetary policies of the Federal Reserve and the Reserve Bank of New Zealand (RBNZ). The slow recovery in China has exerted additional pressure on the Kiwi, while dovish comments from the RBNZ in their previous meeting further impacted the pair.

RBNZ’s Dovish Outlook

Following the RBNZ’s recent decision to maintain interest rates with a dovish outlook, the NZD/USD fell by 1000 pips, bringing the pair to the 0.6040s. Despite moving averages on the daily chart providing support, sellers made another push to the downside on Friday. This move was fueled by stronger-than-expected June retail sales in the United States, causing the MAs to break and the price to drop to 0.6004.

NZD/USD Chart Daily – Sellers Testing MAs at the Bottom of the Range

Impact of US Retail Sales and Politics

The positive US retail sales report for June and shifts in US political sentiment led to a strengthening of the USD last week. Markets fully priced in a rate cut for September and began considering the possibility of two additional cuts in November. The data released indicated a declining but still growing economy, supporting the soft-landing scenario.

Market Reactions and Future RBNZ Rate Expectations

Regarding monetary policy, last week’s RBNZ decision negatively affected the New Zealand dollar. The central bank’s slightly more dovish language increased the likelihood of a rate cut at their next meeting, with the market now pricing in a 55% chance for such a move. This dovish stance, combined with the global economic outlook and domestic pressures, continues to weigh on the NZD/USD pair.

NZD/USD Live Chart