NZD/USD forecast after strong New Zealand trade data

The NZD/USD price declined slightly on Tuesday after the latest strong New Zealand trade numbers. The pair dropped to a low of 0.6570, which was about 4.60% below the highest level this year. This price was also about 12% below the highest level in 2021.

New Zealand trade numbers

The New Zealand economy is doing relatively well, as evidenced by the latest trade numbers. According to the country’s statistics agency, the New Zealand exports increased to $6.07 billion in December from $5.69 billion in the previous month. 

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

At the same time, the country’s imports declined slightly to about $6.55 billion from the previous $6.75 billion. As a result, New Zealand’s trade deficit narrowed down from over $1.06 billion to $477 million.

These numbers reflect the fact that the country’s economy is doing well even as challenges surrounding the Covid-19 pandemic remain.

Other numbers published recently have been relatively strong. For example, the NZD/USD reacted to the fact that the country’s unemployment rate declined sharply in December. Inflation also gathered steam in the fourth quarter of the year.  The same was true with the New Zealand retail sales.

Therefore, focus shifts to the latest Reserve Bank of New Zealand (RBNZ), which is scheduled in the next two weeks. Analysts expect that the bank will sound a bit hawkish and hike interest rates by about 0.25%. RBNZ was among the first central banks to start the hiking cycle in 2021.

The NZD/USD pair has declined because of the stronger US dollar as investors price in several rate hikes by the Federal Reserve. In a recent statement, analysts at Bank of America warned that the Fed could implement 7 rate hikes this year.

NZD/USD forecast

The daily chart shows that the NZD/USD pair has been in a deep downward trend in the past few months as investors worry about the hawkish Federal Reserve. The pair reacted mildly to the latest New Zealand trade numbers.

The chart reveals that the pair has fallen below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has been under pressure.

Therefore, the pair will likely continue falling in the near term as bears target the next key support at 0.6500. It will then reverse into the new month.