The New Zealand Dollar (NZD) weakened significantly against the US Dollar (USD), with the NZD/USD pair dropping below the 0.5800 level and reaching a near two-month low of 0.5797. At the time of reporting, NZD/USD was down 0.65%, reflecting a bearish shift in market sentiment as the pair failed to clear a confluence of key Simple Moving Averages (SMAs) at 0.5854 (100-day), 0.5850 (50-day), and 0.5842 (200-day) [1].
The technical outlook for NZD/USD has turned negative, with the breach of these SMAs opening the door for further downside. The Relative Strength Index (RSI) has also turned bearish, indicating that additional declines may be expected. If the pair continues to fall below 0.5800, the next support levels are identified at the July 29 low of 0.5761, followed by the psychological level of 0.5750, and then the July 3 high, now acting as support, at 0.5658 [1].
The weakness in the Kiwi is attributed to overall US Dollar strength, which is being driven by money markets expecting a rate hike by the Federal Reserve. This shift in expectations has favored the Greenback and pressured the NZD/USD pair lower [1].
Should buyers regain control and push NZD/USD above 0.5855, resistance levels are seen at 0.5900, 0.6000, and the February 18 swing high of 0.6054. In terms of broader currency performance, the New Zealand Dollar was the strongest against the Australian Dollar today, but it declined by 0.71% against the US Dollar [1].
CONCLUSION
NZD/USD has broken below key technical levels, hitting a near two-month low as US Dollar strength prevails amid expectations of a Federal Reserve rate hike. The technical outlook remains bearish, with further downside possible unless buyers reclaim higher resistance levels. Market sentiment is negative for the Kiwi in the short term.