NZD/USD Sellers Aim to Close the Weekly Opening Gap

Market Overview

On Monday, the NZD/USD pair remained under pressure amid economic developments in both New Zealand and the US. In New Zealand, the upcoming Reserve Bank of New Zealand (RBNZ) rate cut has added pressure to the weakening NZD, driven by slower-than-expected GDP growth and declining agricultural exports. This economic backdrop, coupled with expectations of an aggressive rate cut, continues to dampen investor sentiment.

Meanwhile, Scott Bassett, the newly appointed US Treasury Secretary, has been well-received by the financial markets, especially the stock and bond markets. Known as a conservative manager, Bassett has assuaged some market concerns, which contributed to a drop in the 10-year Treasury yield to 4.351% from 4.412% on Friday. This decline reduced the relative yield advantage of the dollar, leading to some softening in recent gains. However, Bassett’s strong advocacy for a strong dollar and support for tariffs suggests that any pullback in the USD may be temporary. Given the contrasting economic narratives, NZD/USD is likely to remain on a downward trajectory, driven particularly by the persistent weakness in New Zealand’s economic outlook.

Technical Analysis

On the hourly chart, NZD/USD maintains a bearish profile following a distinct downward trend. Prices remain positioned below the 34- and 100-period moving averages, which is indicative of sustained bearish pressure. Recent price action has included the formation of a bullish gap, suggesting some buying interest; however, sellers are actively attempting to close this gap, underlining the fragility of bullish momentum. The Relative Strength Index (RSI) stands at 47.83, reflecting that selling pressure still outweighs demand but without reaching oversold conditions. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains in negative territory, with both lines narrowing, hinting at a continuation of the downtrend.

Given the recent breach of the 0.58480 support level, further downside targets are located at 0.58423 (127.2% Fibonacci extension), followed by 0.58394 (141.4%) and 0.58351 (161.8%). If selling pressure persists, the next significant target will be 0.58272. Conversely, a move above the key resistance level of 0.58559 (61.8% Fibonacci retracement) could indicate the beginning of a trend reversal. Should this occur, surpassing the next resistance at 0.58688 would validate a shift towards a bullish trend.

Oscillators Confirmation

Momentum oscillators currently signal mixed conditions but lean toward the bearish side. The RSI remains below 50, reflecting an environment of prevailing selling pressure without entering the oversold zone, which suggests that the downtrend still has room to extend. The MACD histogram stays in negative territory, with the convergence of lines implying some slowing in bearish strength but still not sufficient for a shift in sentiment. Moving averages further corroborate the bearish outlook—the shorter-term moving averages remain firmly below the longer-term moving averages, confirming sustained downward momentum.

Key Support and Resistance Levels

Resistance Levels:

• 0.58688: Key resistance confirming a potential trend reversal if surpassed.
• 0.58559: Initial resistance to test the reversal scenario.
• 0.58480: A breached support level that may now act as a resistance.

Support Levels:

• 0.58423: Immediate target aligned with the 127.2% Fibonacci extension.
• 0.58394: A continuation target at the 141.4% extension.
• 0.58351: The 161.8% Fibonacci extension, key for confirming bearish strength.
• 0.58272: A deeper target if the bearish momentum persists.

Key Events to Watch

Several crucial US economic events scheduled for Monday, November 25, are likely to influence the NZD/USD pair. First, the Chicago Fed National Activity Index is expected to print at -0.28, indicating a decline in economic activity compared to previous months. Additionally, the Dallas Fed Business Activity Index is projected to come in at -3.0, potentially reflecting a softer environment for business and manufacturing activity in the US. Despite these negative indicators, investors will also keep an eye on various Treasury auctions, which could reveal insights into demand and yield levels among investors.

For New Zealand, it is important to keep in mind the currency’s dependency on economic conditions in China. As one of New Zealand’s largest trading partners, any decrease in Chinese economic activity or reduction in import demand could significantly impact the NZD. The continued slowdown in China could lead to a decline in New Zealand exports, pushing the NZD lower against the USD—especially if US economic data continues to show relative stability.

Considering these factors, the bearish trend for NZD/USD is likely to persist if Chinese economic indicators remain weak and no strong economic data emerges from New Zealand. On the other hand, strong data from the US could further bolster the USD, increasing downward pressure on the Kiwi.

Conclusion

The NZD/USD pair is likely to remain under bearish control given weak fundamentals from New Zealand and the strength of the US dollar. Sellers seem determined to close the weekly gap, with the next targets set at 0.58423 and beyond if the momentum continues. Investors should closely monitor key data releases, especially in the US and China, as they could be pivotal for any short-term price adjustments.