Hawkesby RBNZ Interest Rate Outlook

NZD/USD Forecast: RBNZ Decision Looms, technicals Lean Bearish

The NZD/USD pair is poised for potential volatility as the Reserve Bank of New Zealand (RBNZ) prepares to announce its latest monetary policy decision. The outcome will heavily influence the pair’s trajectory, with both upside and downside risks present.

RBNZ Policy Expectations and Potential Impact

A hawkish signal from the RBNZ, suggesting the central bank is nearing the end of its rate-cutting cycle amid an improving economic outlook, could bolster the New Zealand Dollar (NZD). This would likely provide further momentum to the recent upward trend in NZD/USD.

Conversely, downward revisions to the RBNZ’s inflation and/or Official Cash Rate (OCR) forecasts could weigh on the Kiwi, perhaps pushing the pair back towards its monthly lows.

Technical Analysis: Bearish Signals Emerge

According to Dhwani Mehta, Asian Session lead Analyst at FXStreet, the near-term technical outlook for NZD/USD leans bearish.

“from a near-term technical outlook, risks remain skewed to the downside for the Kiwi pair so long as the 14-day Relative Strength Index (RSI) stays below the midline,” Mehta notes. “adding credence to the bearish outlook, the 21-day Simple Moving Average (SMA) is on the verge of crossing below the 100-day SMA, teasing a potential Bear Cross.”

Mehta outlines key levels to watch:

• Bullish Scenario: Buyers need to break above the 21-day SMA and the 100-day SMA confluence near 0.5950 to negate the bearish bias. Further gains could see a test of the 0.6000 round level, followed by the 50-day SMA at 0.5988, and ultimately the 0.6050 psychological barrier.
• Bearish Scenario: A sustained break below the static support near 0.5900 would open the door to a steeper decline towards the August 5 low of 0.5881. A breach of this level would expose the key 200-day SMA support at 0.5833.