NZD/USD Sellers Aim to Extend Downtrend

Market Overview

The NZD/USD pair continues to struggle under persistent bearish pressure, facing an extended decline. This negative trajectory is primarily driven by a mix of economic factors and monetary policies that have impacted the New Zealand dollar. Meanwhile, the U.S. dollar has strengthened on the back of hawkish monetary expectations and positive economic data, further amplifying the bearish sentiment. Weakness in New Zealand’s manufacturing sector, combined with reduced demand for its goods, has exacerbated the depreciation of the kiwi.

Technical Analysis

The daily chart for NZD/USD exhibits a clear bearish trend. The pair recently breached the significant support level at 0.58772, which coincided with the 127.2% Fibonacci retracement level. The break below this critical support has further intensified the bearish momentum, opening the path for continued declines. The Ichimoku cloud (Kumo) has also been broken to the downside, confirming a bearish shift with prices consistently trading below the cloud—a strong indication of seller dominance.

Moreover, the Tenkan-sen (blue line) lies below the Kijun-sen (red line), signaling continued bearish momentum. The divergence between the edges of the Kumo cloud also points downward, highlighting a growing negative sentiment. Together, these signals confirm the strength of the current downtrend.

Next, support is anticipated at the 161.8% Fibonacci level (0.58356), followed by 200.0% (0.57855) and 241.4% (0.57334). These Fibonacci levels represent potential areas where buyers might attempt to halt the decline, but sustained selling pressure could see these supports breached, reinforcing the downtrend.

Oscillators and Momentum

The RSI currently reads 31.92, sitting just above oversold territory. This indicates strong selling pressure, but also the potential for a short-term bounce. The MACD is negative, though its distance from the signal line has narrowed, suggesting some diminishing bearish momentum. While this divergence might hint at a potential pause or short-term correction, overall sentiment remains firmly bearish.

Alternative Scenario

Should the pair fail to extend its downside movement, a rebound could target the key resistance levels at 0.59595 (61.8% Fibonacci retracement) and 0.60373 (recent highs). A decisive push above these resistance levels would indicate a temporary shift back into bullish territory, suggesting a potential corrective rally.

Key Technical Levels Overview

Resistance Levels:

• Resistance 1: 0.58772
• Resistance 2: 0.59114
• Resistance 3: 0.59595
• Resistance 4: 0.60373

Current Price: 0.58656

Support Levels:

• Support 1: 0.58356
• Support 2: 0.57855
• Support 3: 0.57334

Key Events to Watch

Several key economic releases are set to impact NZD/USD in the coming sessions. Notably, the U.S. Producer Price Index (PPI) and Initial Jobless Claims figures are due today. Core PPI is expected to rise by 0.3%, pointing to continued inflationary pressure in the U.S., which would likely bolster the U.S. dollar further, extending the pair’s decline.

Initial jobless claims are forecast at 224,000, and a figure below expectations would reflect a robust U.S. labor market, adding more fuel to the greenback’s rally. Additionally, Federal Reserve Chair Jerome Powell is set to speak later today. Any mention of further tightening could provide additional support for the U.S. dollar, intensifying downward pressure on NZD/USD.

On the New Zealand front, the BusinessNZ Manufacturing Index, expected at 46.9, will shed light on the health of New Zealand’s manufacturing sector. A weaker-than-expected print would underscore a slowdown in industrial activity and could weigh further on the kiwi.

Conclusion

Overall, the NZD/USD pair remains firmly under bearish control, with further downside likely unless key resistance levels are breached. Upcoming U.S. data and Fed rhetoric could be critical in driving further declines in the pair.