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The NZD/USD pair displayed significant bearish momentum last week, closing at 0.5760. This level coincides with the low from September 2023, reflecting the strong dominance of sellers in the market. The pair is struggling to find meaningful support, indicating the prevailing downward trend.
Technical Analysis
On the H4 chart, the NZD/USD pair remains firmly in a downtrend, with both the 50 EMA and 200 EMA acting as dynamic resistance levels, preventing any recovery. The 200 EMA is well above the current price, emphasizing the strength of the bearish momentum.
- Support Levels: The next immediate support target is at 0.5700. If the pair breaks below this level, further declines are likely.
- Resistance Levels: On the upside, if the price breaks above 0.5790 and holds, it could trigger a short-term recovery. The next resistance levels are 0.5830 and 0.5880, offering potential targets before sellers regain control.
Fundamental Factors Impacting NZD/USD
Several key factors are influencing the outlook for the NZD/USD pair:
- US Dollar Strength: The US Dollar remains strong, supported by the Federal Reserve’s hawkish stance and solid economic performance. This has placed significant downward pressure on the New Zealand Dollar.
- New Zealand Economic Concerns: Weak domestic data and subdued economic growth are negatively affecting the New Zealand Dollar. The Reserve Bank of New Zealand (RBNZ) has adopted a more cautious approach compared to the Federal Reserve’s aggressive interest rate policies.
- Upcoming Economic News:
- New Zealand Q3 GDP Data (16 December 2024): This data will provide insights into the country’s economic health. A weaker-than-expected result could further pressure the NZD.
- US Building Permits and Housing Starts (16 December 2024): Strong US housing data could bolster the USD and add to the bearish pressure on NZD/USD.
- Global Risk Sentiment: As a risk-sensitive currency, the New Zealand Dollar is vulnerable to shifts in global sentiment. Any escalation in geopolitical tensions or negative developments in global markets could further weaken the NZD.
Forecast for 16 December 2024
Given the current technical and fundamental setup, the NZD/USD pair is likely to remain under pressure:
- A move below 0.5760 could extend the downtrend toward the 0.5700 level, with further declines possible.
- If buyers manage to push the price above 0.5790, it could lead to a recovery toward 0.5830 and potentially 0.5880. However, the broader trend remains bearish.
Key Levels to Watch
- Support: 0.5760, 0.5700
- Resistance: 0.5790, 0.5830, 0.5880
Conclusion
The NZD/USD pair is currently in a bearish phase, and the downside momentum is expected to continue in the near term. Traders should monitor the 0.5790 resistance level for any potential recovery, but the overall outlook remains negative, with 0.5700 as the next key downside target.
