NZD/USD Price Forecast: Looking for direction with YTD low at 0.5567 in sight

• NZD/USD rebounds from 0.5584 lows but remains capped in the lower range of the 0.5600s.
• The Kiwi is struggling to shrug off bearish pressure triggered by the RBNZ's decision to leave interest rates on hold.
• A dovishly-tilted Fed provided some support to the Kiwi during the early Asian session.

The New Zealand Dollar (NZD) is giving back previous gains against the US Dollar (USD) on Thursday, turning negative on the daily chart, and leaving the immediate bearish trend intact after dropping nearly 1% on Wednesday. The NZD/USD pair trades at 0.5615 at the European session opening, as the rebound from 0.5584 lows was capped around 0.5635 during the Asian trading session.

The Kiwi dropped sharply on Wednesday as the Reserve Bank of New Zealand (RBNZ) left interest rates unchanged, disappointing investors who were expecting a 25-basis-points hike. Governor Anna Breman pointed to further rate hikes in December, but the NZD remained depressed.

Later on Wednesday, the US Federal Reserve (Fed) also stood pat on rates, and Chairman Kevin Warsh’s comments were considered tilted to the dovish side, which capped the US Dollar rally and provided some support to the pair.

Warsh hinted at further monetary tightening ahead but refused to commit to a particular timing. Beyond that, his comments affirming that “monetary medicine is starting to work” and that the central bank might bring inflation to target without having to “throw people out of work” suggest that the terminal interest rate might be lower than expected.

Technical Analysis: Bears remain in control with 0.5567 low at a short distance

NZD/USD trades at 0.5619, keeping a bearish near-term bias as bulls failed to find acceptance above 0.5635 earlier in the day. The Relative Strength Index (14) has retreated toward the low-30s, while the Moving Average Convergence Divergence (MACD) remains in negative territory, together hinting that downside pressure is still in play.

Initial resistance is located at the intraday high of 0.5637, which is closing the path towards the 0.5700 area, which held bulls on October 21, 25 and 27, and the September 22 high near 0.5750.

On the downside, Wednesday's low at 0.5584 is likely to test bears ahead of the mentioned 18-month low at 0.5567 hit earlier in October. Further down, the 127.2% Fibonacci retracement of the June-August rally, near 0.5530, seems like a plausible target.

(The technical analysis of this story was written with the help of an AI tool. Know more.)