The NZD/USD exchange rate continued rising, crossing an important resistance level as a new Central Bank governor takes charge. The New Zealand dollar rose for six consecutive days, moving from a low of 0.5581 on November 20 to the current 0.5735.
New Zealand signals end of cuts
The NZD/USD pair has rebounded in the past few days, soaring by nearly 3% from its November lows. This recovery accelerated last week after the bank delivered its interest rate decision.
The bank slashed interest rates by 0.25%, with the exiting governor hinting that the pace of cuts has ended. It brought rates to 2.25%, meaning that it has slashed rates by 325 basis points in the last 15 months. It also left a 20% chance that the bank will cut rates again next year.
The bank slashed rates in a bid to boost an economy that recovered at a slower pace than other countries. Still, the main risk has been that inflation has remained at an elevated level this year.
The headline CPI rose by 2.5% in the first quarter, 2.7% in Q2, and 3% in Q3, but the central bank expects the figure to continue moving downwards. Officials expect the figure to drop to 2% by mid-2026.
Most importantly, the central bank is optimistic that the economy will continue doing well in 2026. Officials are predicting that the economy will expand by 2.8% in the year through March 2027, supported by interest rate cuts.
Looking ahea, the next key macro event to watch will be the start of Anna Breman’s tenure as the head of the country’s central bank. She enters this role as the first foreigner and the first woman to do so. He previously served as the deputy governor of Sweden’s central bank.
Odds of Federal Reserve rate cuts rise
The hawkish RBNZ has coincided with the fact that odds are that the Federal Reserve will maintain a highly dovish sentiment rise. Data compiled by Polymarket shows that officials anticipate that the bank will cut rates by 0.25% in the next meeting in December.
Data also shows that odds that Donald Trump will appoint Kevin Hassett as the next central bank governor rose. Hasset currently serves as the Director of the National Economic Council at the White House.
He is a Trump loyalist who will likely maintain a dovish tone by advocating more interest rate cuts. As such, if he has his way, there is a chance that he will bring rates to near 1% in 2025.
NZD/USD technical analysis
NZDUSD chart | Source: TradingView
The daily timeframe chart shows that the NZD to USD exchange rate has rebounded in the past few days. It soared from a low of 0.5580 on November 20 to the current 0.5735 as the Fed and RBNZ divergence continued.
The pair has now moved above the upper side of the descending channel that connects key levels since July this year.
It has also moved to the strong, pivot, reverse point of the Murrey Math Lines tool at 0.5730. The pair also jumped above the 50-day moving average, while the Relative Strength Index (RSI) has pointed upwards.
Therefore, the most likely NZD/USD forecast is bullish as odds of a Fed and RBNZ divergence continue. If this happens, the next important level to watch will be at 0.5850, the Major S/R pivot point level.
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