NZD/USD forecast as New Zealand’s trade surplus narrows

The NZD/USD exchange rate pulled back to the lowest point since Thursday after New Zealand published weak trade data. It dropped to an intraday low of 0.6220, which was lower than last Friday’s high of 0.6285.

RBNZ interest rate decision

New Zealand’s trade numbers in February were a bit disappointing. Data by the statistics agency showed that the country’s exports dropped from $5.30 billion in January to $5.23 billion in February. They peaked at $6.87 billion in June last year and have been dropping since then. 

In the same period, Japan’s imports dropped from over $7.4 billion to about $5.95 billion. New Zealand’s imports have been dropping continuously after peaking at $8.52 billion in December last year. 

As a result, New Zealand has moved strongly to experiencing trade deficits. Its trade deficit in February came in at $741 million, which was better than the previous month’s $1.9 billion. The last month that New Zealand had a trade surplus was in June last year when it rose to $192 million. 

The next important catalyst for the NZD/USD price will be the upcoming Federal Reserve decision scheduled for Wednesday this week. Economists believe that the Federal Reserve will have a balancing act to do because of the current state of the market. With banks failing, further interest rate hikes could continue breaking things down. 

At the same time, as we wrote here, US inflation remains high while the unemployment rate has dropped to 3.6%, the lowest level in years. Therefore, another small interest rate hike of 0.25% could be needed to contain the situation. 

The NZD/USD price also pulled back after the Federal Reserve announced a new currency swap line to contain the crisis facing Credit Suisse, the second-biggest Swiss banking group. 

NZD/USD forecast 

NZD/USD chart by TradingView

The NZD to USD exchange rate pulled back slightly after peaking at 0.6286 on March 20. This price was the highest it has been since February 16 of this year. The price remains below the key resistance point at 0.6270, the highest point on March 1. It has also moved slightly above the 25-period and 50-period moving averages and is slightly below the major S/R pivot point of the Murrey Math Lines.

Therefore, the pair will likely continue falling as sellers target the next key point at 0.6168, which is the strong pivot reverse point. A move above the key resistance point at 0.6240 will invalidate the bearish view.