NZD/USD Analysis
The NZD/USD pair dipped to around 0.5820 on Wednesday, continuing a recent retreat as the New Zealand dollar struggles to capitalize on better-than-expected domestic inflation figures.
The Consumer Price Index in New Zealand increased by 1.5% quarter-on-quarter in the second quarter, surpassing market predictions of 1.4% and rising significantly from the previous 0.9% increase. Year-over-year, inflation also climbed, moving from 3.1% to 4.1%, which was above the anticipated 4.0%.
This rise in inflation might bolster expectations that the Reserve Bank of New Zealand could either keep its cautious monetary stance or look into additional rate increases. Still, the kiwi hasn’t been able to maintain its gains, largely due to ongoing geopolitical uncertainties and a tentative market atmosphere that continues to favor demand for the US dollar.
Additionally, upcoming figures on U.S. unemployment claims are projected to increase slightly, from 208,000 to 212,000. If the results come in lower than expected, it could signal ongoing strength in the US labor market, further pressuring the NZD/USD pair.
Despite New Zealand’s inflation uptick, the currency pair remains under pressure, hovering around 0.5820, indicating that broader demand for the dollar is currently stronger than the domestic support for the kiwi.
Short-Term Technical Analysis
On the 4-hour chart, NZD/USD is trading at 0.5816, remaining below a tight band of resistance near the 20-period simple moving average (SMA) at 0.5839 and 0.5817, which keeps a mildly bearish sentiment in play. Support from the 100-period SMA at 0.5763 and minor horizontal demand at 0.5810 is still present, but the relative strength index (RSI) near 41 indicates that upward momentum has waned after the recent decline from the mid-0.58s.
Looking upward, immediate resistance levels are positioned at 0.5817, 0.5823, and 0.5834, with the 20-period SMA at 0.5839 reinforcing this short-term supply zone. Stronger resistance barriers are found at 0.5907, 0.5930, and 0.5965. On the downside, the initial support is at 0.5810, which is above the 100-period SMA at 0.5763. A break below that level could lead to a more significant decline in the near term.
