New Zealand Dollar struggles to gain traction as cautious RBNZ outlook weighs

• NZD/USD trades around 0.5880 on Monday, virtually unchanged on the day after two consecutive days of gains.
• Cautious expectations surrounding New Zealand’s monetary policy outlook limit demand for the Kiwi.
• The strength of the US labor market limits the US Dollar’s downside ahead of upcoming inflation data.

NZD/USD trades around 0.5880 on Monday at the time of writing, posting a modest 0.06% decline on the day after two consecutive days of gains. The New Zealand Dollar (NZD) struggles to extend its rebound as investors remain cautious about the Reserve Bank of New Zealand’s (RBNZ) monetary policy outlook.

Caution surrounding the path of New Zealand interest rates continues to weigh on the Kiwi, despite the RBNZ’s decision to raise its policy rate for a second consecutive meeting. Investors appear reluctant to price in a more aggressive monetary tightening cycle, limiting the NZD’s appreciation potential.

Meanwhile, the downside in NZD/USD remains contained by the hesitant performance of the US Dollar (USD), as investors now turn their attention to upcoming inflation data from the United States (US). These figures could play an important role in shaping expectations surrounding the Federal Reserve’s (Fed) next policy decisions.

The strength of the latest US employment data nevertheless provides some support to the Greenback. Nonfarm Payrolls (NFP) increased by 162K in August, well above expectations of 56K, while the Unemployment Rate remained unchanged at 4.1%.

Despite the robust figures, the US monetary policy outlook remains dependent on inflation developments. Goldman Sachs believes that a benign Consumer Price Index (CPI) reading could prevent the Fed from raising interest rates, even after the solid performance of the labor market in August.

Upcoming US inflation data therefore represents an important catalyst for NZD/USD. Persistent inflationary pressures could reinforce expectations of further Fed monetary tightening and support the US Dollar, while softer inflation could provide some relief to the New Zealand Dollar.

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5878, hovering in a neutral near-term bias as it pivots just above the rising trendline support at 0.5876 and the 100-period simple moving average (SMA) around 0.5872, while remaining capped by the descending trendline resistance near 0.5884. The pair consolidates beneath the 200-period SMA at 0.5902 and the horizontal barrier at 0.5903, suggesting a compressed range, with the Relative Strength Index (RSI) near 48 hinting at balanced momentum rather than a decisive directional push.

On the topside, initial resistance emerges at the nearby trendline cap around 0.5884, followed by the 200-period SMA at 0.5902 and the horizontal resistance at 0.5903, where a sustained break would be needed to ease the broader downside pressure. On the downside, immediate support is seen at the rising trendline near 0.5876, ahead of the 100-period SMA around 0.5872, with a deeper slide exposing the horizontal floor at 0.5856 if selling pressure resumes.

(The technical analysis of this story was written with the help of an AI tool. Know more.)