The New Zealand dollar is facing pressure from the strong US dollar, following the Federal Reserve’s updated forecasts last week. Stock market expectations suggest only one interest rate cut this year, possibly in December. Some American monetary policymakers have supported these expectations, deeming them reasonable.
In May, the New Zealand services sector experienced a significant downturn, leading to the lowest indicator value since 2007. This reflects the country’s economic state, which is already in a recession. The business activity index also decreased to 43.0 points from 46.6 points, indicating a worsening market situation.
These data increase the likelihood of the Reserve Bank of New Zealand eventually deciding to cut rates, with the main forecast pointing to November. However, the RBNZ’s stance, reiterated multiple times, suggests that rate revisions are unlikely before 2024, with any reduction not expected until mid-2025.
In the NZD/USD technical analysis, on the H4 chart, a correction wave has taken the market to the level of 0.6220, with a new wave forming along the downward trend. The first target is at 0.6055, with a possible correction to 0.6140 before a further decline to 0.6016, the local target. This scenario is supported by the MACD indicator showing a downward trend.
On the H1 chart, a downward impulse towards 0.6140 has been executed, leading to a consolidation range around this level. An expected move is a downward break to 0.6080, followed by a correction to 0.6140 and then a decline to 0.6055. The first target is downwards, supported by the Stochastic oscillator indicating a downward direction.
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