The New Zealand dollar is held captive by conflicting trends. On the one hand, it is seen to fall due to the general easing of monetary policy by world central banks, and on the other, it is trying to maintain his gains.
The NZD/USD pair could not develop an upward correction above the local resistance level of 0.6443 at the beginning of September. As a result, the pair resumed to fall, analysts said. The NZD/USD pair was trading near the 0.6225 mark, below the short-term resistance level of 0.6293, on Tuesday, October 1. An alternative scenario could be a breakdown of the local resistance level of 0.6365 and corrective growth with targets at positions 0.6443 and 0.6490, analysts said. They also do not exclude a retest of 0.6260.
According to analysts, further growth of the NZD/USD pair is unlikely if the Federal Reserve does not aggressively reduce interest rates. At the same time, the New Zealand regulator is inclined to cut rates, analysts said. They allow such an opportunity since the leadership of the Reserve Bank of New Zealand (RBNZ) is set to further soften its monetary policy.
Recall that in August of this year, the RBNZ reduced the interest rate immediately by 50 basis points (bp) to 1.00%. The regulator explained his decision by the aggravation of trade confrontation between the US and China, as well as the loss of momentum in the New Zealand economy.
In this situation, the NZD/USD pair may again test record lows of 2015 near the psychologically important mark of 0.6200. The kiwi's further fall depends on the strengthening of the US dollar index over the levels of 99.40–99.60, analysts said. A breakthrough of a local high in the index chart along with a breakdown of the record low in the NZD/USD chart can provoke a radical reversal of the current trend. With further abnormal growth of the US dollar above 99.40 and in case of a breakthrough of the bar of 99.60, analysts do not exclude a powerful collapse in the quotes of the NZD/USD pair. With the implementation of such a scenario, it is possible for the pair to collapse up to the levels of 0.6140-0.6120, analysts said.
The New Zealand currency remains vulnerable due to the high risk of a slowdown in the global economy and a protracted trade conflict between the United States and China, which remain the country's largest trading partners. The kiwi is currently trading in the range of 0.6233–0.6236, trying to stay at current levels.
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