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The NZD/USD pair remains under pressure from several key factors.
Today, the pair attracts new sellers, continuing its steady intraday decline. Spot prices have dropped to 0.5755 and remain near the lowest level since October 2022, reached on Monday.
Key Factors Driving the Decline:
- Dovish RBNZ:The New Zealand dollar continues to weaken due to the dovish stance of the Reserve Bank of New Zealand (RBNZ) and expectations of more aggressive policy easing by the central bank.
- China's Economic Concerns:Worries over China's economic recovery and escalating fears of a US-China trade war are additional factors undermining Antipodean currencies, including the NZD.
- US Dollar Strength:Simultaneous US dollar buying further pressures the NZD/USD pair lower. Signs that progress toward achieving the 2% inflation target in the United States has stalled have convinced investors that the Federal Reserve will slow the pace of rate cuts next year.
- Expectations that Donald Trump's policies (if re-elected) could lead to higher inflation and government borrowing continue to support elevated US Treasury yields.
- Alongside this, geopolitical risks arising from the escalating Russia-Ukraine conflict and tensions in the Middle East bolster the safe-haven US dollar.
Focus on Key Events:
- US Retail Sales Data:Traders should watch the release of monthly retail sales data from the United States for short-term opportunities.
- FOMC Meeting:However, the main focus remains on the outcome of the crucial two-day FOMC meeting on Wednesday. Investors will closely analyze the accompanying policy statement and Fed Chair Jerome Powell's speech for clues regarding the future path of interest rate cuts. His comments will influence the short-term USD price dynamics, adding new directional momentum to the NZD/USD pair.
Technical Outlook
From a technical perspective:
- Oscillators on the daily chart remain deeply in negative territory and far from oversold conditions.
- This indicates that the path of least resistance for the pair remains to the downside.
In conclusion, while short-term movements may be influenced by upcoming US data and the FOMC outcome, broader fundamentals and technical indicators continue to suggest a bearish outlook for NZD/USD.
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