The New Zealand Dollar (NZD) is trading bearish on the RBNZ dovish

• New Zealand dollar weakens in Thursday’s Asian session.
• The accommodative stance of the RBNZ continues to undermine the Kiwi.
• Investors await US data for further impetus, including retail sales, initial jobless claims and the Philly Fed manufacturing index.

The New Zealand dollar (NZD) remains on the defensive on Thursday. The Reserve Bank of New Zealand’s (RBNZ) dovish stance after a surprise interest rate cut on Wednesday put selling pressure on Kiwis as the easing cycle came much earlier than expected.

However, further confirmation of the downward trajectory of US inflation triggered expectations of a Federal Reserve (Fed) interest rate cut in September. This, in turn, could drag the US dollar (USD) lower and limit downside for NZD/USD. Later on Thursday, traders will watch US retail sales, initial weekly jobless claims, the Philly Fed manufacturing index and industrial production.

Daily Digest Market Movers: NZD remains weak after RBNZ dovish move

• RBNZ Governor Adrian Orr said early Thursday that the central bank was maintaining an appropriately accommodative policy stance and was likely looking to assess when to adopt further interest rate cuts.
• RBNZ board members have decided to cut their Official Cash Rate (OCR) by 25 basis points (bps) from 5.50% to 5.25%. Market participants were expecting a rate-on-hold decision.
• Board members agreed that policy will need to remain tight for some time to ensure that domestic inflationary pressures continue to ease, according to the minutes of the RBNZ interest rate meeting.
• During the press conference, the RBNZ’s Orr said he was confident that inflation back in the target range can start the re-normalization of rates. Orr also said the central bank was considering a number of moves; the consensus was for 25 bps.
• The US consumer price index (CPI) rose 2.9% from a year ago in July, compared with a 3% increase in June, below market consensus. Core CPI rose 3.2 percent on the year, following a 3.3 percent increase seen in July, in line with the market forecast.

Technical analysis: The New Zealand dollar maintains a negative outlook

The New Zealand dollar is trading in negative territory on the day. The NZD/USD bearish outlook remains intact as the pair faces rejection around the 100-day EMA and the downtrend line around 0.6050 on the daily chart. The 14-day Relative Strength Index (RSI) is looking lower below the median line of 50, suggesting persistent bearish pressure.

The crucial resistance level for NZD/USD appears at 0.6050, the key 100-day EMA and the downtrend line. If the price manages to break this level, it would indicate the possibility of a further rally to 0.6077, the upper limit of the Bollinger Band. Further north, the next barrier appears at 0.6154, the July 8 high.

On the downside, a breach of the psychological level of 0.6000 would see a drop to 0.5930, an August 2 low. Extended losses will see the next level of contention around 0.5857, the lower Bollinger Band and a July 29 low.