Key Points:
The New Zealand dollar (NZD/USD) rose to $0.56193 on Thursday, reflecting a modest recovery as traders returned from the New Year holiday.
Optimism surrounding China’s economic recovery continues to underpin the Kiwi, with market participants reacting positively to President Xi Jinping’s pledge to implement proactive policies to stimulate growth.
The currency advanced from a daily low of $0.55832, reaching a high of $0.56215, in line with growing interest in risk-sensitive assets.
Despite the upward movement, the NZD remains subdued, hovering near two-year lows. The chart reveals steady resistance near the $0.562 level, mirroring broader concerns about the domestic economy and RBNZ policy.
Picture: NZDUSD reflects short-term bullish momentum but remains capped near two-year lows, as seen on the VT Markets app.
The MACD indicator highlights short-term bullish momentum, but the modest spread suggests limited enthusiasm for an extended rally. Price action remains below the 50-period moving average, signalling persistent downward pressure.
New Zealand’s economic challenges continue to weigh on the Kiwi. Recent data pointing to a potential recession has spurred expectations of aggressive monetary easing.
The RBNZ’s cash rate currently sits at 4.25%, but markets anticipate a 50-basis-point cut in February, with rates forecast to decline to 3% by the end of 2025.
These dovish signals keep the Kiwi under pressure despite gains in global risk appetite. Traders remain cautious, pricing in the potential for extended weakness as the domestic economy grapples with headwinds.
The NZD’s modest recovery suggests temporary optimism tied to China’s economic prospects. However, the inability to sustain a rally beyond $0.562 indicates limited upside in the face of RBNZ policy easing.
The Kiwi could remain vulnerable if upcoming data fails to confirm a stronger recovery in China or if domestic indicators highlight further economic risks.
For now, traders should monitor developments in Chinese factory activity and domestic data releases, which will likely dictate the Kiwi’s trajectory in the coming weeks.
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