NZD/USD. Analysis and Forecast

[Redator]

The NZD/USD pair has encountered resistance at the 200-day Simple Moving Average (SMA), around the 0.5845 level. The U.S. dollar is showing positive momentum for the second consecutive day, supported by broad weakness in the Japanese yen. Additionally, cautious sentiment regarding U.S. equity futures strengthens the dollar's role as a safe-haven currency and is seen as a key factor exerting some downside pressure on the risk-sensitive New Zealand dollar. However, dollar strength does not appear overly optimistic against the backdrop of expectations for a dovish Federal Reserve policy, which in turn could lend support to the NZD/USD pair.

According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut by the Federal Reserve in October and December is estimated at about 95% and 84%, respectively. Moreover, concerns that a prolonged U.S. government shutdown could disrupt economic activity are dampening enthusiasm among dollar bulls. Thus, to confirm that the upward trend in NZD/USD seen over the past two weeks has run its course, strong selling pressure would be required.

At the same time, growing expectations of further monetary easing by the Reserve Bank of New Zealand (RBNZ) make it reasonable to wait for a sustained rally in NZD/USD and a firm close above the 200-day SMA before initiating long positions for continued upside.

For better trading opportunities, attention should be paid to speeches by key FOMC members, including Federal Reserve Chair Jerome Powell's remarks on Thursday. Additionally, the FOMC minutes, due Wednesday, may clarify the stance on rate cuts, influencing the U.S. dollar and potentially providing fresh momentum to the NZD/USD pair.

From a technical perspective, oscillators on the daily chart remain negative; nevertheless, NZD/USD is still holding above the psychological 0.5800 level, suggesting some resilience. Still, unless prices confidently break through the 200-day SMA near 0.5845, it is premature to speak of a bullish outlook.

The table below shows the percentage change of the U.S. dollar against major currencies this week. The dollar has shown the strongest performance against the Japanese yen.

The material has been provided by InstaForex Company - www.instaforex.com