NZD/USD Buyers Face Key Resistance as Dollar Weakens
Market Overview
The New Zealand dollar continued its upward trajectory on Monday, benefiting from broad-based weakness in the US dollar. This softening in the greenback comes amid growing market skepticism about the resilience of the US economy in light of lingering inflation risks and soft macroeconomic surprises. As risk sentiment improves, commodity-linked currencies like the NZD and AUD are finding renewed demand.
Technical Analysis
On the 4-hour chart, NZD/USD has extended its recovery, climbing steadily since breaking above the short-term ceiling at 0.59770. Buyers are now confronting the key resistance at 0.59881, which coincides with the upper boundary of a short-term consolidation range. A decisive break above this level could trigger bullish continuation towards the next targets at 0.60023 and 0.60179.
Momentum indicators support the bullish view. The RSI remains in bullish territory above 50, signaling persistent upward pressure, while MACD lines are trending higher, confirming recent buying strength. However, failure to hold above 0.59881 could expose the pair to a pullback, with immediate support seen back at 0.59770. Deeper declines may test 0.59614 and, if breached, open the door to 0.59361.
Key Technical Levels
Resistances: 0.59881, 0.60023, 0.60179
Supports: 0.59770, 0.59614, 0.59361
Fundamental Drivers
Focus turns to the Reserve Bank of New Zealand’s Financial Stability Report due on Wednesday. While not typically a direct market mover, this release may shed light on policymakers’ risk outlook and banking sector assessments. Meanwhile, markets continue to price in a 75% chance of a 25 basis point rate cut later this month, with forecasts pointing to a total of three rate reductions by year-end. Such expectations may temper NZD gains if dovish rhetoric dominates the report.
Conclusion
A sustained break above 0.59881 exposes NZD/USD to 0.60023 and 0.60179. Failure at resistance risks pullback toward 0.59614.
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