The New Zealand Dollar (NZD) advanced for the second consecutive day, with NZD/USD trading around 0.5950 during European hours on Thursday, driven by expectations of another rate hike from the Reserve Bank of New Zealand (RBNZ) in September [1]. Strategists at BNY noted that the Kiwi is trading slightly above its rolling 12-month average, but expressed skepticism regarding market pricing, which anticipates two more RBNZ hikes by year-end. BNY highlighted that while domestic activity remains robust, inflation expectations are relatively well-anchored, casting doubt on the likelihood of further tightening despite the NZD's firm tone [1].
The NZD/USD pair's strength is also attributed to potential challenges facing the US Dollar (USD), as the US Treasury Department announced plans to at least double its buyback operations for long-dated securities maturing in 10 to 30 years. This intervention aims to cap long-term borrowing costs and enhance global USD liquidity, which could exert downside pressure on the Greenback [1]. However, ongoing geopolitical tensions in the Strait of Hormuz between the US and Iran may provide safe-haven support for the USD, with former President Donald Trump noting continued oil transit and openness to negotiations, though risk aversion remains elevated [1].
From a technical perspective, NZD/USD maintains a bullish near-term bias, trading above both the nine-period and 50-period Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) stands at 66.23, approaching overbought territory, suggesting strong upside momentum but also the potential for profit-taking if buyers continue to chase highs. Initial support is seen at the nine-period EMA near 0.5901, with broader bullish structure reinforced by the 50-period EMA at 0.5838 [1].
CONCLUSION
The New Zealand Dollar's recent gains are underpinned by expectations of further RBNZ rate hikes, though some market participants remain skeptical about the likelihood of additional tightening. Technical indicators suggest strong momentum for NZD/USD, but the pair may face profit-taking as it approaches overbought levels. US Dollar dynamics and geopolitical risks continue to influence the currency pair's outlook.