FX.co ★ NZD/USD

The NZD/USD currency pair has continued its downward trend, declining for the fourth consecutive day and trading around the 0.5640 level during Thursday's European trading session. The New Zealand dollar (NZD) is facing persistent weakness, primarily driven by market expectations of a more accommodative monetary policy from the Reserve Bank of New Zealand (RBNZ). The RBNZ is widely anticipated to implement another 50 basis point interest rate cut at its upcoming meeting on February 19th, following two previous rate reductions in the current cycle. These expectations of further monetary easing are weighing heavily on the New Zealand dollar. On the economic front, New Zealand released mixed data. The country recorded a trade surplus of NZ$219 million in December, driven by robust export growth of 17%, significantly outpacing a 6.5% increase in imports. This positive trade balance provides some support for the New Zealand dollar. However, offsetting this positive news, the ANZ Bank Business Confidence Index fell to a five-month low of 54.4 in January, compared to 62.3 in December. This decline in business confidence reflects growing concerns about the economic outlook. Similarly, the Business Expectations Index, reflecting future business prospects, decreased for the third consecutive month, reaching its lowest level since August at 54.4 in January 2025. These declining business confidence and expectation indicators point to a potential slowdown in the New Zealand economy, adding to the downward pressure on the NZD.

From a technical perspective, the break of a key support area has increased the risk of further declines for the NZD/USD pair. The pair's recent price action suggests a potential for further downside movement. On the upside, a sharp rise in the pair's value could dampen bearish sentiment and potentially push prices towards the 0.5740 area, a level not seen since November 2022. This level represents a significant resistance zone, and a sustained move towards it would require substantial bullish momentum. The confluence of fundamental factors, including expectations of further RBNZ rate cuts, concerns about the New Zealand economic outlook, and a hawkish US Federal Reserve, paints a bearish picture for the NZD/USD pair. The technical outlook, with the recent break of a support area, further reinforces this bearish bias. Traders should closely monitor upcoming economic data releases, particularly the US GDP figures, and any statements from central bank officials for further clues about the pair's future direction. The combination of these factors suggests that the NZD/USD pair is likely to remain under pressure in the near term.