NZD/USD Bears Aim to Extend Downtrend Amid Weak Chinese Data

Market Overview

NZD/USD remains under pressure as bears continue to push the pair lower amid a pessimistic outlook driven by weak data from China. China, New Zealand’s largest trading partner, recently reported a sharper-than-expected drop in new bank lending for October, despite efforts to maintain supportive financial measures. This dampened sentiment around the New Zealand dollar, as any signs of economic weakness in China are closely linked to New Zealand’s economic health, given their strong trade ties. As a result, NZD remains vulnerable, with the market sentiment heavily skewed towards further losses.

Additionally, within New Zealand, investor anxiety has heightened on speculation that the Reserve Bank of New Zealand (RBNZ) may implement a substantial 75 basis point rate cut in its upcoming meeting. Such a move would significantly exceed the currently priced-in expectations of a 50 basis point reduction. This prospect is adding pressure on the New Zealand dollar, as traders brace for potential aggressive monetary easing.

Technical Analysis

On the 4-hour chart, NZD/USD bears successfully broke below the previous support at 0.59466, extending the downtrend initiated back on 30th September. The pair currently finds immediate support at 0.59383. A decisive break below this level would likely pave the way for further downside, with subsequent targets at 0.59278, 0.59161, and ultimately 0.59035. Each of these levels serves as a critical juncture, and their breach could fuel bearish momentum, potentially accelerating the decline.

Conversely, for any meaningful reversal to materialize, buyers would need to reclaim control above the resistance level at 0.59771. A break above this resistance would signal a shift in market sentiment and could trigger a corrective move higher.

Momentum indicators further validate the current bearish sentiment. The RSI remains in bearish territory, reflecting the strong selling pressure, while the MACD also continues to trade below the signal line, suggesting that bears remain in firm control. Moreover, the moving averages are positioned in a downward slope, reinforcing the view that any upside attempts are likely to face stiff resistance.

Key Technical Levels Overview

Resistance Levels:

• Resistance 1: 0.59466
• Resistance 2: 0.59771

Current Price: 0.59444

Support Levels:

• Support 1: 0.59383
• Support 2: 0.59278
• Support 3: 0.59161
• Support 4: 0.59035

Key Events to Monitor

Key events that could influence NZD/USD this week include U.S. inflation and retail sales data, which may impact overall dollar strength. In addition, New Zealand’s food price inflation and the Business Manufacturing Index are key domestic releases that traders should monitor closely. These events are likely to shape expectations around the RBNZ’s upcoming monetary policy decision and could contribute to significant volatility for NZD/USD.

Conclusion

NZD/USD remains in a bearish trajectory, breaking key support levels as sellers look to drive the pair further downward. Upcoming economic data from both the U.S. and New Zealand will be pivotal in determining the pair’s near-term direction.