HomeNewsNZD/USD Slide Pauses, But For How Long?
NZD/USD Slide Pauses, But For How Long?

NZD/USD Slide Pauses, But For How Long?

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NZD/USD is stable on Monday following last week’s rout which knocked almost 5 percent off the Kiwi’s purchasing power against the dollar.

The New Zealand dollar to US dollar exchange rate has started the week on a firmer footing and currently up 0.40% to 0.6200. The positive tone this morning is the polar opposite of last week’s price action. The kiwi lost ground each day last week, eventually closing out the five-day session with a 5.60 percent loss.

The sell-off has almost erased the Kiwi’s gains from July and the start of August. Between July 14 and August 12, NZD/USD climbed 6.7 percent from 0.6060 to 0.6845 before changing course lower.

The recent dollar strength stems from last week’s economic data. The minutes of the FOMC meeting released on Thursday indicated that Fed members are likely to retain their present hawkish posture. The president of the St. Louis Fed, Jim Bullard, specifically informed reporters that he is leaning toward a 75bp hike at the next meeting.

As a result, the buck was unstoppable against the kiwi last week. The bounce we are seeing this morning is likely due to profit-taking ahead of this week’s packed economic calendar. The next five days sees the release of many potentially market-moving data points, including the US Manufacturing PMI for August, US Home Sales for July, and the critical US Core PCE inflation data. Not to mention that Federal Reserve Chair Powell will speak at the Jackson Hole summit on Friday. 

Taken into account the potential flashpoints for the dollar this week, the kiwi could be in for heightened volatility. In that case, the charts will tell us the levels to watch for.

Kiwi To Dollar Forecast

NZD/USD broke below the 50-Day Moving Average (DMA) on Friday. Subsequently the 50-DMA at 0.6258 is the first overhead resistance level. Above that, the longer-term 100-DMA at 0.6394 (blue) is an additional obstacle for the bulls to navigate.

On the downside, an obvious target is July’s two-year low of 0.6060. Should NZD/USD breach this level. it brings the 2020 covid low of 0.5469 into focus.

NZD/USD Price Chart


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Elliot Laybourne
Elliott is a former investment banker with a 20 year career in the city of London. During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making. During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others. Today, he splits his time between Thailand and Dubai, from where he provides trading consultancy and business development services for family office and brokerage clientele.