NZD/USD falls to lows since November 2022 below 0.5900

• The NZD/USD pair lost almost 1%, dipping below the key 0.5900 level.
• The Dollar benefits from a cautious sentiment in the markets.
• Factory orders declined in the US in July at a faster than expected rate.
• The RBA held rates steady, as expected.

The NZD/USD pair faced selling pressure driven mainly by a stronger Dollar in a cautious environment in the markets. The US reported weakness in July Factory Orders, which fell faster than expected but did not dampen the dollar’s momentum. On the other hand, along with the AUD, the New Zealand Dollar is the worst of the session after the Reserve Bank of Australia (RBA) decided to keep rates at 4.10%, as expected.

The US will not release any relevant data for the remainder of the session, but its US Dollar Index rose to a multi-month high of 104.80 as the US dollar benefits from cautious sentiment in the markets. In this sense, the markets await new catalysts to continue betting on the upcoming decisions of the Federal Reserve (Fed). World Interest Rate Probabilities (WIRP) suggest that markets still see some chance that the Fed will tighten further by 0.25% for the December meeting, with the target rate eventually settling at 5.75%.

The New Zealand calendar was also empty on Tuesday. Meanwhile, the Interest Rate Probability (WIRP) tool suggests investors are firmly convinced that the Reserve Bank of New Zealand (RBNZ) will not announce any rate hikes until the February meeting and will hold rates steady at 5.5%. In this sense, if the Fed does not end its tightening cycle, monetary policy divergences could continue to weaken the NZD.

NZD/USD levels to watch

Looking at the daily chart, the technical outlook for the NZD/USD is bearish in the short term. The Relative Strength Index (RSI) is comfortably positioned below its midline in positive territory. It is skewed to the south, indicating favorable selling momentum, and is further supported by the negative signal from the moving average convergence divergence (MACD), which shows red bars, underscoring the growing bearish momentum. Furthermore, the pair is below the 20,100 and 200-day simple moving averages (SMAs), indicating that the sellers dominate the overall outlook.

Support levels: 0.5850, 0.5830, 0.5800.

Resistance levels: 0.5900, 0.5950 (20-day SMA), 0.5970.

NZD/USD Daily Chart