The New Zealand Dollar (NZD/USD) steadied around the 0.5800 mark at the start of the Asian session on Friday, following a dip to a near two-month low of approximately 0.5797 during the previous American session. This stabilization comes after a significant multi-day decline from the 0.5900 area, with the overall tone remaining bearish for the currency pair [1].
The recent pressure on NZD/USD was attributed to a stronger-than-expected United States Producer Price Index (PPI), which showed final demand prices rising by 5.4% year-on-year in August [1]. Market participants are now awaiting the release of New Zealand's Business NZ Manufacturing PMI for August, which previously stood at 54.3, as well as the upcoming US Consumer Price Index (CPI) data. The CPI release is seen as a pivotal event that could influence Federal Reserve expectations ahead of next week's meeting. According to the article, a higher-than-expected CPI print could increase pressure on NZD/USD, while a softer reading may provide the Kiwi with an opportunity to recover [1].
From a technical perspective, NZD/USD is trading below both the 20-period and 100-period Simple Moving Averages (SMAs), at approximately 0.5844 and 0.5907, respectively, reinforcing the bearish outlook. The Relative Strength Index (RSI) is in oversold territory near 28, indicating that downside momentum is stretched but not yet reversed. Key resistance levels are identified at 0.5808 and 0.5832, with further resistance at the SMAs, while immediate support lies at 0.5797 and 0.5793. A break below these support levels could lead to further declines, despite the oversold technical conditions [1].
CONCLUSION
The New Zealand Dollar remains under pressure near two-month lows, driven by strong US inflation data and cautious technical signals. Market participants are closely watching upcoming US CPI and New Zealand PMI releases for further direction. The overall sentiment remains bearish, with the potential for additional downside if US inflation surprises to the upside.