Facts:
- NZDUSD fell below the support level around 0.5900, which had held since April.
- On the D1 timeframe, the EMA30 crossed below the EMA100.
- After Wednesday’s drop following the RBNZ decision, the price did not rebound above the 50% Fibonacci retracement level.
Recommendation:
- Short position (SELL) on NZDUSD at market price
- Target Price (Take Profit; TP): 0.56690 (TP1), 0.55420 (TP2)
- Stop Loss (SL): 0.59000
Source: xStation5
Opinion
The New Zealand dollar is weakening against the USD today, amid broad-based dollar strength ahead of Fed Chair Jerome Powell’s speech, reinforcing the newly established bearish sentiment on NZDUSD.
Wednesday’s slump was the result of the dovish tone in the Reserve Bank of New Zealand’s decision: the RBNZ cut rates and signaled further easing despite the recent rebound in inflation. The bank is giving more weight to the risks of weak economic growth. Record-high unemployment in recent months and accelerating labour emigration are significantly limiting the potential for further inflation.
The US Federal Reserve, meanwhile, is at a crossroads. On one hand, markets are eagerly pricing in more rate cuts, anticipating the end of Powell’s term and the likely appointment of a dovish Trump nominee. On the other hand, current data doesn’t provide strong arguments for renewed cuts. Rising core inflation and a PPI jump above expectations have cooled swap market pricing, while yesterday’s PMI reports confirmed price pressures.
A hawkish surprise at Jackson Hole therefore looks more likely, potentially offering additional short-term support for the USD. If the Fed sticks to a neutral, data-dependent stance, the downward trend in NZD should still persist, given the outlook for further RBNZ cuts and markets already pricing in a Fed leadership change in May 2026.
Methodology
The recommendation was developed based on fundamental analysis of monetary policy in New Zealand and the US and technical analysis of the NZDUSD chart. The direction of the recommendation was guided by Exponential Moving Averages (EMA30 crossing below EMA100), Fibonacci retracement (failure to correct above the 50% level) and monetary policy expectations (risk of a hawkish Fed pivot, RBNZ cuts).
Take Profit and Stop Loss levels were determined using price action and Fibonacci retracement zones. Stop Loss was set at the previous support near 0.59. Further downside could face obstacles between the 61.8–78.6% Fibonacci retracement levels, an area where price consolidated in Feb–Mar 2025.
