The pair plunged to 0.5892, marking a significant three-month low. The New Zealand dollar remains under pressure as the US dollar gains strength due to the start of the two-day Federal Reserve meeting.
The Fed is expected to leave the interest rate in the target range of 5.25-5.50% this time. At the same time, the market is eagerly awaiting clear signals regarding the September meeting, when borrowing costs are expected to be reduced.
A week earlier, the NZD fell almost 2% against the USD due to excessive risk aversion in the global market, reduced carry trade positions with the JPY and the relatively sluggish macroeconomic backdrop in China.
Expectations about future actions by the Reserve Bank of New Zealand are also putting fundamental pressure on the New Zealand dollar. The headline forecast assumes that the RBNZ will soon cut the interest rate. At the moment, investors assume that there will be a rate cut at the August meeting with a probability of 44%, which is quite high considering all the data.
NZD/USD Technical Analysis
On the H4 chart of NZD/USD, the market completed a wave of decline to the level of 0.5858. Today, the market is correcting this wave of decline. We expect a growth link to the level of 0.5903. If this level is broken upwards, the correction may continue to 0.5987 (test from below). After the correction is completed, we will consider the beginning of a new wave of decline to the level of 0.5840 with the prospect of continuation of the trend to the level of 0.5822. Technically, this scenario is confirmed by the MACD indicator. Its signal line is below the zero mark and is directed strictly upwards.
On the H1 chart of NZD/USD, the market is forming a growth structure towards the level of 0.5903. After working from this level, we will consider the probability of a drop to the level of 0.5884 (test from above). Then, we will consider the probability of another growth structure to the level of 0.5986. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is above the 80 mark. We expect a drop to the level of 50 and then to the level of 20.
By RoboForex Analysis Department
Disclaimer
The forecasts contained in this document are based on the author's personal opinion. This analysis cannot be considered as trading advice. RoboForex does not assume any responsibility for trading results based on trading recommendations and reviews contained herein.
