1.16 NZD to USD: Reset to Below 2023 Low or Fast-Track to 0.60?

Currency Outlook

The New Zealand dollar (NZD) has been on a downward trend against the US dollar (USD) in recent months, falling from a high of 0.6850 in early April 2023 to a low of 1.1630 in late May 2023. This decline has been driven by a combination of factors, including the Federal Reserve's aggressive interest rate hikes, the Reserve Bank of New Zealand's (RBNZ) more dovish stance, and global economic uncertainty.

Drivers of NZD/USD Exchange Rate

1. Interest Rate Differentials:

The Federal Reserve has raised interest rates by 100 basis points since March 2023, while the RBNZ has only raised rates by 50 basis points. This divergence in monetary policy has made the USD more attractive to investors seeking higher returns, leading to a strengthening of the USD against the NZD.

2. Economic Growth:

The US economy is expected to grow by 2.3% in 2023, while the New Zealand economy is expected to grow by only 1.5%. This difference in growth prospects has also contributed to the NZD's weakness against the USD.

3. Global Economic Uncertainty:

The ongoing war in Ukraine, rising inflation, and concerns about a global recession have all contributed to increased risk aversion among investors, which has led to a flight to safety in the USD.

Technical Analysis

From a technical perspective, the NZD/USD pair has broken below its key support level of 1.1800, indicating that the pair could be headed towards further declines. The next level of support is at 1.1600, and if this level is broken, the pair could then fall towards 1.1400.

Outlook and Predictions

Given the current economic and technical factors, it is likely that the NZD will continue to weaken against the USD in the near term. The pair could potentially fall to 1.1400 or even lower if the market sentiment remains negative.

However, it is important to note that currency markets are volatile, and anything can happen. If the RBNZ signals a more hawkish stance or if the US economy slows down, the NZD could recover some lost ground.

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NZD to USD Forecast 2025: Will the Kiwi Dollar Fall to 0.60?

Table 1: NZD/USD Exchange Rate History

Table 2: Economic Growth Projections

Table 3: Interest Rate Forecasts

Table 4: Support and Resistance Levels

Reviews

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