FOUR Reasons Why the NZ Dollar May See Weakness Ahead: Latest NZD Exchange Rate Forecasts

In short, investors are looking forward to the end of 'easy money' - a period that has seen the New Zealand dollar benefit owing to the country's superior yield on sovereign bonds.

Here is how the Kiwi currently stacks Up:

  • The pound to NZ dollar exchange rate - Sterling sellers are looking at their best rates since about March.
  • The euro to NZ dollar exchange rate - Euro sellers are looking at their best rate since June.
  • The US dollar to New Zealand dollar - Dollar sellers are looking at their best kiwi buying opportunity since June.

If you are holding out for better exchange rates then don't hesistate, ensure your FX provider has the relevant buy order in place for when your rate is achieved. Likewise, if there is a threshold you are not willing to cross to the downside ensure stop-loss orders are in place. Please learn more here.

Four reasons why the Kiwi dollar could be heading lower in coming months

Four main factors continue to point to further downside in NZD argue ANZ Bank:

1. Dairy prices have stabilised, but prices have flattened, implying downside risks remain.

2. Political risks mean the election is not the fait accompli it once was.

3. ANZ monthly inflation gauge validates markets move to reducing probabilities for RBNZ action.

4. USD developments remain positive in line with ANZ’s ahead of consensus FOMC March lift off call.

In line with this view, ANZ maintains a short NZD/USD position from 0.86 targeting a move to 0.82.

Technical Reasons to Expect Further NZD Declines

In their latest forecast for the NZ dollar Against the US dollar Admiral Markets notice that momentum is edging away from the Kiwi.

In a recent note to clients Admiral Markets say:

"NZDUSD closed below its ascending trend line support, stretched from August 2013, on Tuesday and broke the critical support zone of 0.8400 – 0.8390, coinciding 38.2% Fibonacci Retracement Level of its June 2013 to July 2014 up-move, by making a low of 0.8372 during the current day.

"Should the pair closes below 0.8390 level, 0.8300 – 0.8290 becomes immediate rest for the pair, breaking which the pair can test 0.8260 – 0.8250, encompassing 50% Fibo. level.

"A sustained trading below 0.8250 negates the chances of near-term up-move by the pair and can make it vulnerable to test 0.8130 – 0.8125 support zone, including 61.8% Fibo. level.

"However, the oversold levels of RSI signals re-test of 0.8435-40, support turned resistance zone, including ascending trend line, which is closely followed by the 200-day EMA of 0.8495 – 0.8500 zone. Should the pair close above 0.8500, the 100-day EMA and 23.6% Fibo. level near 0.8565 – 0.8570 can cap the near-term up-move of the pair."