Kiwi Remains Weak On Dovish Mood Around RBNZ

Fundamental Analysis

* Kiwi Drift: The New Zealand Dollar remains under pressure, continuing its downward trend due to the dovish outlook surrounding the Reserve Bank of New Zealand (RBNZ). The RBNZ is anticipated to implement an additional 50-basis-point rate cut at its policy meeting of the year in November, with markets even factoring in the potential for a 75-basis-point reduction. Weak economic fundamentals in New Zealand, such as soft labor market indicators, bolster expectations for an aggressive rate-cutting strategy from the RBNZ. Additionally, demand for the Kiwi also waned in the face of a stronger U.S. dollar, backed by favorable U.S. economic data that might lead the Federal Reserve to enact a moderate rate cut in November. According to the CME FedWatch Tool, there is a 95.8% likelihood of a 25-basis-point cut from the Fed, with minimal expectations for a larger 50-basis-point move.

Technical Analysis

* Technical Breakout: Recent bearish market structure breakout along with persistent bearish trend suggest the pair to likely further extend its downside.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 0.58750. Conversely, a potential reversal is also to be expected and the price could head back towards 0.61000 after it breach back above the level 0.59850.

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Potential Risks

Looking ahead, investors will focus on key upcoming U.S. data, including the ADP Non-Farm Employment Change, GDP, Core PCE Price Index, and Non-Farm Payroll, given the lack of significant data releases from New Zealand this week

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Monitoring

Stay updated on US and New Zealand data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.