NZD – The New Zealand dollar continues to face downward pressure after a double-top pattern

New Zealand's Q1 GDP grew 0.8% quarter-on-quarter, in line with expectations; year-on-year growth was 1.5%, higher than the market expectation of 1.1%. Q4 GDP growth was revised upward to 0.5% quarter-on-quarter, from an initial estimate of 0.2%. Manufacturing was the main driver, with 9 out of 16 sectors showing growth.

Since August 2024, the Reserve Bank of New Zealand has cut interest rates by a total of 325 basis points, currently maintaining the rate at 2.25%. The market expects an approximately 80% probability of a rate hike in July. Inflation is at 3.1%, still above the 1%-3% target range.

The New Zealand dollar retreated after failing to break through the psychological level of 0.60 against the US dollar at the beginning of the month, forming a symmetrical double-top pattern with the neckline around the 0.58 level. Therefore, a clear break below this area would likely present significant downward technical pressure. The support is estimated at 0.5750 and the early April low of 0.5679, followed by the 0.56 level. The resistance is seen at 0.5840 and 0.59, then at 0.5940 and the 0.60 level, with the next level referencing the July 1st high of 0.6122 from last year.

Forecast range:
Resistance 0.5840 - 0.5900 – 0.5940 - 0.6000* – 0.6122
Support 0.5800 - 0.5750 – 0.5679 – 0.5600

This Week's News Highlights:
18/6 New Zealand Q1 GDP Grows 0.8% QoQ
Friday New Zealand May Trade Balance (06:45)

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