NZDUSD is at a key technical junction. The previously broken and retested head and shoulders formation is exerting downward pressure, but the important support zone between 0.5825 and 0.5850 is holding for now. The 100-day and 200-day moving averages have also formed a tight support-resistance range, causing the currency to remain trapped in a narrow range.
Both the Federal Reserve and the Reserve Bank of New Zealand are expected to cut rates twice this year. Growth expectations for 2025 are closely aligned, with only a 0.3-point advantage for the U.S., and the gap is narrowing. Inflation expectations are also similar, with U.S. figures slightly higher, mirroring the GDP trend.
The 2-year bond yield spread between the U.S. and New Zealand has remained flat since April. During that time, NZDUSD climbed from 0.55 to 0.61 before pulling back to the current level near 0.5890.
Similar fundamental statistics and conflicting technical signals have caused NZDUSD to form an uncertain range between 0.5930 on the upside and the 0.5825–0.5850 support zone on the downside. If either of these key levels breaks, volatility may return quickly.
A break above 0.5930, which coincides with both the broken neckline and the 100-day moving average, could push the price toward the descending trendline from the 2021 top (highlighted in blue on the chart). On the other hand, a break below the 0.5825–0.5850 zone which also includes the 200-day moving average, could trigger a move toward the head and shoulders pattern target, currently near 0.57.
The first two weeks of August will be crucial for the dollar index, following the sharp downward revision in payrolls data. Market reaction, revisions to expectations, commentary from Federal Reserve members, and the release of July inflation data will provide greater clarity. This wave of information could finally break NZDUSD out of its current indecisive range.
Both the Federal Reserve and the Reserve Bank of New Zealand are expected to cut rates twice this year. Growth expectations for 2025 are closely aligned, with only a 0.3-point advantage for the U.S., and the gap is narrowing. Inflation expectations are also similar, with U.S. figures slightly higher, mirroring the GDP trend.
The 2-year bond yield spread between the U.S. and New Zealand has remained flat since April. During that time, NZDUSD climbed from 0.55 to 0.61 before pulling back to the current level near 0.5890.
Similar fundamental statistics and conflicting technical signals have caused NZDUSD to form an uncertain range between 0.5930 on the upside and the 0.5825–0.5850 support zone on the downside. If either of these key levels breaks, volatility may return quickly.
A break above 0.5930, which coincides with both the broken neckline and the 100-day moving average, could push the price toward the descending trendline from the 2021 top (highlighted in blue on the chart). On the other hand, a break below the 0.5825–0.5850 zone which also includes the 200-day moving average, could trigger a move toward the head and shoulders pattern target, currently near 0.57.
The first two weeks of August will be crucial for the dollar index, following the sharp downward revision in payrolls data. Market reaction, revisions to expectations, commentary from Federal Reserve members, and the release of July inflation data will provide greater clarity. This wave of information could finally break NZDUSD out of its current indecisive range.
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.