NZD/USD price prediction: bearish outlook amid central banks policies
New Zealand dollar faces uphill battle against USD amid bearish market sentiment
The New Zealand dollar’s recent attempt to recover has faltered, leaving NZD/USD in a precarious position.
After snapping a three-day losing streak on Thursday to rise to $0.586, the pair met stiff resistance near $0.5870, where bearish technical indicators and broader market forces weighed heavily. As the week draws to a close, the Kiwi faces headwinds from a dovish Reserve Bank of New Zealand (RBNZ) and lingering USD strength, keeping its outlook bearish.
NZD/USD started the week on a bearish trajectory, dropping from $0.5915 on Monday to $0.5830 by Wednesday. While Thursday’s early gains briefly pushed the pair higher, resistance at $0.5870, marked by the 200-day EMA and an intraday bearish trendline proved insurmountable. The pair has since slipped down to $0.5860, reinforcing the downtrend that has persisted since the week began.
NZD/USD price dynamics (November-December 2024). Source: TradingView
Central bank policies add pressure to NZD/USD
A modest decline in the US dollar supported NZD/USD's temporary rise on Thursday, but the greenback remains strengthened by hawkish Federal Reserve commentary. Fed Chair Jerome Powell noted the US economy’s resilience, suggesting further efforts to normalise interest rates. In contrast, the RBNZ’s dovish stance adds to the Kiwi’s vulnerability. The central bank has already reduced its benchmark interest rate by 125 bps this year to 4.25% and hinted at an additional 50 bps cut in early 2025 if economic conditions warrant further easing.
Immediate resistance remains at $0.5870, with a secondary ceiling at $0.5922. On the downside, near-term support lies at $0.5815, a critical level to watch should bearish momentum persist. Unless NZD/USD breaks above the confluence of resistance near $0.5870, the bearish trend looks set to continue. Traders should remain cautious of further downside risks as macroeconomic divergences and technical signals weigh heavily on the Kiwi’s outlook.
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