Kiwi Plummeted Amid Bleak Economic Prospects In New Zealand

Fundamental Analysis

* Grim Economic Future: The New Zealand Kiwi has fell against its peers due to the country’s sluggish economic growth. Recent statistics revealed that the New Zealand economy entered a technical recession during the last quarter of 2024. Contrary to economists’ expectations of a 0.1% increase, the New Zealand Gross Domestic Product (GDP) decreased by 0.1%, as reported by Statistics New Zealand. This decline follows a 0.3% contraction in the third quarter, meeting the criteria for a recession with two consecutive quarters of negative growth. Recent statements from New Zealand finance minister, Nicola Willis, indicate that the government may desire lower interest rates to stimulate economic growth. Willis stated that growth is anticipated to be “considerably slower” than previously projected, attributing this slowdown to the impact of elevated interest rates on economic activity.

Technical Analysis

* Technical Breakout: NZDUSD was traded lower following prior breakout below the previous support level 0.6050. MACD which illustrate bearish momentum signal with the formation of death cross along with bearish market structure breakout suggest the pair to likely extend its downward pressure.

* Resistance And Targets: If the bearish momentum persists, there’s a strong likelihood that the price will move towards the subsequent support level at 0.5945 and possibly breach it. Conversely, if the price fails to break the level 0.5945, it could signal a short-term technical correction and lead it back towards the resistance level of 0.6050.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Despite recent negative data and cautious remarks from New Zealand’s Finance Minister, the RBNZ has not indicated any inclination to lower rates. RBNZ Deputy Governor Christian Hawksby stressed the importance of maintaining restrictive interest rates for an extended duration, especially since they currently stand at a 15-year high of 5.5%. Consequently, investors will remain attentive to upcoming economic indicators for guidance.

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Monitoring

Stay updated on New Zealand and U.S data, RBNZ updates and any shifts in the US Dollar’s strength. by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.