NZD – Commodity Currency on a Temporary Upward Trend, Focus on US-Iran Deal

Supported by expectations of an interest rate hike, the New Zealand dollar has performed strongly this week, rising approximately 1.7% against the US dollar in three trading days and heading towards the 0.60 level. The Reserve Bank of New Zealand hinted on Wednesday that interest rates may soon be raised to address inflationary pressures from energy prices. The market currently expects an 80% probability of a rate hike by the RBA in July, with rates potentially reaching 3.0% by the end of the year.

The NZD/USD pair has been trading in a narrow range between 0.58 and 0.59 for over a week, but broke out of the upper end of the range on Wednesday. Based on a potential 100-pip extension, the initial target is the 0.60 level, with subsequent resistance levels at the July 1, 2024 high of 0.6122 and 0.62. The medium-term support level is based on the September 2024 high of 0.6378. The supporting levels will be seen at the 25-day moving average of 0.5870 and the 0.58 level. The significant support is expected at 0.5760 and the early April low of 0.5679.

Forecast range:
Resistance: 0.6000* – 0.6122 – 0.6200 – 0.6378
Support: 0.5870 – 0.5800 - 0.5760 – 0.5679

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