NZD/USD Bearish Outlook as Risks Mount and USD Demand Strengthens

[[NZD/USD]] is trading slightly below the  50-day simple moving average (SMA), which has been a persistent rejection zone for bulls.  Yesterday, the NZD/USD pair reached a daily high of 0.6221 and a daily low of 0.6153. Today, the market opened at 0.6199, slightly lower than the previous day’s close. As of now, the last price that NZD/USD  recorded stands at 0.6183, reflecting a further decline in the price. This negative daily change of -0.0016 or -0.26% reaffirms the ongoing bearish sentiment in the market.

Considering the broader timeframe, the previous week witnessed a high of 0.6221 and a low of 0.6124 for the NZD/USD pair. These levels are important support and resistance zones that traders should closely monitor. Additionally, for the previous month, the pair reached a high of 0.625 and a low of 0.599, providing further insights into the overall price range and potential turning points for the currency pair.

This technical analysis of NZD/USD suggests a continuation of bearish momentum as the price remains below the 50-day simple moving average. The RSI indicates a neutral momentum stance, signifying the absence of strong buying or selling pressure. The recent price action, coupled with the weekly and monthly overview, confirms the prevailing bearish sentiment. Traders should exercise caution and consider potential short-selling opportunities or wait for a bullish reversal confirmation before considering long positions. 

Fundamentals 

The NZD/USD currency pair is expected to face downward pressure in the near term, driven by several fundamental factors that highlight increased risk aversion and a stronger demand for the safe haven US dollar. These factors include a drop in New Zealand’s unemployment rate, a preference for the USD over the risky New Zealand dollar, softer inflation figures indicating slower economic growth in China, and anticipation surrounding the Reserve Bank of New Zealand’s (RBNZ) upcoming monetary policy meeting.

Softening inflation figures from China released on Monday,  indicate a potential slowdown in economic growth. Given New Zealand’s significant trading relationship with China, any signs of weakened growth in the Chinese economy can have a notable impact on the NZD/USD exchange rate. The softer inflation figures suggest a potential decrease in demand for New Zealand’s exports, further contributing to the bearish outlook for the NZD/USD pair.