NZD/USD UNDER PRESSURE NEAR 0.5610 AS US YIELDS KEEP USD FIRM
NZD/USD trades around 0.5610 during European trading after modest gains the previous day. The pair remains under downward pressure as the US Dollar strengthens alongside higher US Treasury yields ahead of the FOMC Minutes.
US Treasury yields remain elevated, with the 10-year yield above 5.30% and the 30-year yield near 5.69%. Persistent inflation fears, expanding fiscal deficits and a surge in AI-related debt issuance continue to weigh on investor sentiment and keep Treasury yields elevated.
Recent US labor-market data has tempered expectations for aggressive Federal Reserve tightening. The CME FedWatch Tool currently prices around a 22% probability of a Fed rate hike at the October meeting.
The Reserve Bank of New Zealand (RBNZ) recently raised its official cash rate by 25 basis points to 2.75%, marking its second consecutive rate increase. The move reflects the central bank’s efforts to push domestic inflation back toward its 2% midpoint target. Money markets have fully priced in another rate hike by December, while the next RBNZ policy decision is scheduled for October 28.
From a technical perspective, NZD/USD remains below the 9-period EMA at 0.5634 and the 50-period EMA at 0.5760, reinforcing the bearish near-term bias. The 14-day RSI at 29.63 is in oversold territory.
On the other hand, initial resistance is located at the 9-period EMA at 0.5634, followed by the 50-period EMA at 0.5760. On the downside, the absence of nearby structural support leaves the pair vulnerable to further weakness while it remains below these moving averages.
For market participants, the key factors remain NZD/USD near 0.5610, US Treasury yields, the 22% October Fed rate-hike probability, RBNZ policy expectations, the 0.5634 and 0.5760 resistance levels and the RSI at 29.63, which may provide further context for the near-term direction of NZD/USD.
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