NZDUSD entered a significant downtrend after peaking at 0.63774 on September 30, driven by technical signals and fundamental factors. The formation of a Shooting Star pattern confirmed the exhaustion of bullish momentum, leading to a decisive break below key technical levels, including the 50-period Exponential Moving Average. With bearish candlesticks and momentum indicators signaling further downside potential, traders are closely monitoring key support levels. Meanwhile, the Reserve Bank of New Zealand's recent rate cut to 4.75% has added further pressure as the market faces weakening domestic economic conditions and global uncertainties.
Overview
NZDUSD entered a significant downtrend after peaking at 0.63774 on September 30, driven by technical signals and fundamental factors. The formation of a Shooting Star pattern confirmed the exhaustion of bullish momentum, leading to a decisive break below key technical levels, including the 50-period Exponential Moving Average. With bearish candlesticks and momentum indicators signaling further downside potential, traders are closely monitoring key support levels. Meanwhile, the Reserve Bank of New Zealand's recent rate cut to 4.75% has added further pressure as the market faces weakening domestic economic conditions and global uncertainties.
Key Economic Events
Wednesday 04:00 am (GMT+3) - New Zealand: Official Cash Rate (NZD)
Wednesday 14:30 - (GMT+3) - USA: EIA Crude Oil Stocks Change (USD)
Thursday 15:30 (GMT+3) - USA: CPI m/m (USD)
Friday 09:00 am (GMT+3) - UK: GDP m/m (GBP)
Friday 15:30 (GMT+3) - Canada: Employment Change (CAD)
Friday 15:30 (GMT+3) - USA: PPI (USD)
Technical Analysis
After reaching a peak of 0.63774 on September 30, NZDUSD entered a downward trajectory, driven by both technical and fundamental factors. The formation of a Shooting Star reversal pattern at the top signaled the exhaustion of bullish momentum and marked the beginning of a trend reversal, confirming the shift in market sentiment. Prices have decisively moved below the 50-period Exponential Moving Average, reinforcing the bearish momentum. This technical development, coupled with the presence of long bearish candlesticks, signaled an acceleration of the downtrend, further highlighting the growing selling pressure in the market. The confirmation of the downtrend was further solidified as prices broke below the swing low of 0.61060. Both the Momentum oscillator and Relative Strength Index (RSI) reinforce the bearish outlook. Specifically, the Momentum oscillator has dipped below the 100 baseline, while the RSI remains under the 50 level, indicating continued selling pressure and suggesting further downside momentum in the near term.
Potential Upside Targets
Should the bulls take market control, traders may direct their attention toward the four potential resistance levels below:
0.61060: The initial resistance is set at 0.61060, which reflects the swing low from September 11.
0.62260: The second price target is seen at 0.62260, corresponding to the weekly Pivot Point (PP) estimated using the standard methodology.
0.63081: The third target is established at 0.63081, aligning with the weekly resistance (R1) estimated using the standard Pivot Points methodology.
0.63774: An additional price target is estimated at 0.63774, corresponding to the peak established on September 30.
Potential Downside Targets
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
0.59743: The first level of support is identified at 0.59743, reflecting a daily low from August 15.
0.59363: The second support level is established at 0.59363, representing the 161.8% Fibonacci Extension drawn from the swing low of 0.61060 to the swing high of 0.63774.
0.58497: The third support level is seen at 0.58497, corresponding to the trough from August 5.
0.57732: An additional downward target is observed at 0.57732, aligning a weekly trough.
Fundamentals
The Reserve Bank of New Zealand's Monetary Policy Committee lowered the Official Cash Rate (OCR) by 50 basis points to 4.75% on October 9, 2024. The decision reflects a shift towards easing monetary policy as inflation converges toward the 2% midpoint of the 1-3% target range. The Committee cited weak domestic economic activity, subdued consumer spending, and softening employment conditions as key factors influencing the rate cut. Global economic uncertainties, including slowdowns in the US and China and geopolitical risks, were also noted. The Committee emphasized that future rate adjustments would depend on the evolving economic outlook.
Conclusion
In conclusion, NZDUSD remains under strong bearish pressure, driven by both technical indicators and fundamental factors. The breakdown below key support levels and bearish momentum signals suggest further downside potential in the near term. While traders monitor key resistance and support levels, the recent rate cut by the Reserve Bank of New Zealand to 4.75% has added to the currency's challenges, with weak domestic economic activity and global uncertainties influencing market sentiment. The outlook remains bearish unless significant shifts in either technical patterns or fundamental conditions arise.