USD to NZD Rate Faces Resistance at 0.6250 After China LPR

The NZD to USD rate continues to see volatility, with the FOMC rate decision adding further to this since Wednesday and the Loan Prime Rate from the PBOC last night. This forex pair gained 1 cent this week, only to give back the gains after the FED meeting, but buyers returned again as risk sentiment improved on a “soft-landing” scenario for the USS economy, pushing the price above 0.62 again in NZD/USD, however buyers were facing resistance at the 0.6250-60 zone where the 100 weekly SMA has been providing resistance.

NZD/USD Chart Weekly – The 100 SMA Keeps Acting As Resistance

The NZD/USD pair has been in a persistent downtrend, as evidenced by the weekly chart, where the moving averages have acted as strong resistance points. The 100 Simple Moving Average (SMA), marked in red, has been particularly significant, and the pair is currently testing this level after a notable rebound in August and again this week. The rebound came as the US dollar weakened, allowing buyers to push NZD/USD above the previous resistance zone around 0.62.

NZD Buyers Struggle at 100 SMA for Bullish Continuation

Despite this recovery, traders have faced difficulty pushing the price beyond the next resistance zone at the 100 weekly SMA. However, the pair recently broke above the 0.6220 level, signaling a potential shift towards a bullish trend in the short term. If the price can successfully breach the 0.6260-70 resistance zone, it would open the door for further upward momentum, with 0.6300 as the next target. This level represents the highest point reached this year, and clearing it would confirm the continuation of the bullish wave. For now, traders are closely watching these key resistance zones as NZD/USD seeks to consolidate its position and continue its upward trajectory. A failure to break these levels could lead to a retracement, but for now, the pair is positioning itself for a potential test of this year’s high.

New Zealand Economy Feeling the Burden

New Zealand’s Q2 GDP contracted by -0.2%, which, while better than the forecasted -0.4%, still reflects negative growth. This follows a marginal 0.1% rise in the previous quarter. Year-on-year, GDP shrank by -0.5%, aligning with market expectations but representing a sharp contrast from the 0.1% growth observed in the prior quarter. Although the Q2 contraction was less severe than anticipated, the data highlights ongoing economic challenges. Key sectors such as retail trade, agriculture, and wholesale trade have shown significant slowdowns, contributing to a broader sense of economic fragility. These industry-specific declines underscore the need for potential policy interventions to stabilize growth. If the economy continues to stagnate or contract, the Reserve Bank of New Zealand may be prompted to adopt more aggressive fiscal or monetary measures to combat recession risks.

PBOC Loan Prime Rates

NZD/USD Live Chart