• NZD/USD has fallen below the 25-day EMA, with Kiwibank adjusting its forecast to a 0.5900 target amid expectations of RBNZ rate cuts.
  • China’s recent stimulus measures underwhelmed markets, providing limited support to the Kiwi dollar.

The New Zealand dollar (NZD/USD) has slipped below its 25-day exponential moving average (EMA) and could potentially test the 50-day EMA next. But, can sellers maintain the momentum and push further into bearish territory? 

Kiwibank is betting on more downside due to faster and deeper rate cuts from the Reserve Bank of New Zealand (RBNZ). However, their initial bearish outlook has softened somewhat. 

“In our previous FX Tactical, we anticipated the Kiwi heading towards the 0.5700 mark. But given its reluctance to trade down to that level, we’ve adjusted our expectations. While we still believe the Kiwi should be lower, it’s clear the 0.5700 target is less likely. At this point, 0.5900 seems a more reasonable level,” the bank stated. 

Further complicating the outlook is China’s influence. Like the Australian dollar, the Kiwi can find support from economic developments in China. Talks of a potential stimulus package from Beijing had initially buoyed market sentiment, but UBS remains unimpressed. The investment bank noted that the scale of China’s recent measures falls short of previous stimulus efforts. 

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