NZD – The New Zealand dollar is testing a technical bottom, capped by expectations of a rate cut on Wednesday

The Reserve Bank of New Zealand is widely expected to cut its official overnight lending rate (OCR) by 25 basis points to 3.00% on Wednesday. Despite recent economic improvement, the New Zealand economy needs further monetary stimulus to address weak growth and employment. After signaling a slowdown in the pace of easing in February, the Reserve Bank of New Zealand cut interest rates by 25 basis points in April and then held rates steady in July. Many economists expect further easing in 2025 following Wednesday's likely cut, but the focus will be on the central bank's latest forecasts.

With the market already pricing in a 25 basis point rate cut on Wednesday, downside potential is likely to be limited, and attention will likely be on the central bank's announcement. As seen on the technical chart, a trend of lowering waves appears to be forming from the July 1 high of 0.6120 to the July 24 high of 0.6059, and finally to last Wednesday's high of 0.5997. It is estimated that a break above the top of the trend line at 0.60 this week is necessary to break the downward trend. It is then expected to test 0.6060 and then 0.6120, with the next level at 0.62. Meanwhile, downward support will continue to be provided by the 250-day and 200-day moving averages, currently at 0.5890 and 0.5830, with higher support expected at 0.5730 and 0.5660.

Forecast range:
Resistance: 0.6000* – 0.6060 – 0.6120 – 0.6200
Support: 0.5890 – 0.5830 – 0.5730 – 0.5660

Focus:
Wednesday
Renminbi Interest Rate Decision (10:00 AM)

Thursday
New Zealand Dollar July Trade Balance (06:45 AM)

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