New Zealand Dollar Stages Rebound

New Zealand Dollar Stages Rebound by Andrew Blumer last updated on December 10, 2023

New Zealand Dollar (NZD) Stages Rebound Against Greenback

The New Zealand Dollar (NZD) isn't exactly showing any strength against the greenback during Friday's session. This comes as the data from China is showing further weakness in one of the world's largest economies.

However, it appears that the pair is now ready to stage a recovery as the NZD/USD has moved from 0.588 to around 0.5890 (+10 pips).

But the bigger picture is that the NZD/USD lost ground against the greenback on Friday. All of this occurred due to Jerome Powell's speech, where he discussed the need for more rate hikes.

After the hawkish comments, the USD gained demand once again, followed by a rise in the yields and foreign capital inflows. This allowed the NZD/USD to break the dynamic support of 50 SMA (D1) by the end of Friday's session. Earlier, the same SMA was serving as support for the NZD/USD buyers.

Support Near 0.5850 Remains Relevant

It appears that the Fed's comments have put the short-term recovery of NZD/USD at risk. For now, NZD/USD trades near 0.5890, which is only a little higher than 0.5874 (a lower high from 2nd November). So, if the pair breaks the support of 0.5874, it will mean more weakness for the NZD/USD.

Any further weakness in the NZD/USD will open the doors to a test of 0.5862 and then the 0.58 round level. However, some analysts believe that all of these support zones are just minor obstacles while the real target is somewhere around 0.5790.

On the upside, the most reasonable resistance is 0.6001, which is also the highest from the 3rd of November. So, any break beyond this level will mean that the Kiwi bulls are in charge once again. In this scenario, the next target for the Kiwi to accomplish will be 0.6055.

For now, the long and medium-term trend in NZD/USD is bearish, with a higher chance of more downside in the next sessions.