Five consecutive days of decline? The New Zealand dollar has fallen to 0.5650. Why have interest rate hike expectations become a "paper tiger"?
2026-06-24 13:18:45
On Wednesday (June 24) during Asian trading hours, the New Zealand dollar continued its decline against the US dollar, falling as much as 0.3% to around 0.5650, a new low in nearly six months, and is on track for its fifth consecutive trading day of decline.
Complex geopolitical tensions in the Middle East, coupled with strong US economic data, have boosted the US dollar, putting sustained downward pressure on the New Zealand dollar. However, widespread market expectations of a July rate hike by the Reserve Bank of New Zealand have provided some support for the New Zealand dollar.
The core reason for the recent continued weakness of the New Zealand dollar is the overall strength of the US dollar, and the rise of the US dollar is driven by two major factors.
Geopolitically, the situation in the Middle East presents complex and contradictory signals. US President Trump claimed that Iran had "fully and completely" agreed to open its facilities for nuclear inspections, but Iranian Foreign Minister Abbas Araqchi quickly responded that substantive nuclear negotiations had not yet begun, clearly downplaying market optimism about a rapid breakthrough between the US and Iran.
Meanwhile, Iran’s chief nuclear negotiator issued a stern warning, stating that the Strait of Hormuz “will never return to its pre-war state” and will always remain under Iran’s tight control, further exacerbating market concerns about energy supplies and regional stability.
However, positive signals also emerged from Washington—the US sponsored a new round of negotiations between Israel and Lebanon, aimed at facilitating a ceasefire agreement with Hezbollah, which is backed by Iran. This complex geopolitical situation has continued to support the US dollar as the world's primary safe-haven asset.
In terms of economic data, the preliminary readings of the US PMI for June exceeded expectations across the board, further solidifying the narrative of "American exceptionalism".
The S&P Global Composite PMI rose to 52.2, significantly higher than May's 51.5; the manufacturing output index jumped to 55.7, far exceeding the expected 54.8; and the services PMI recorded 51.3, also higher than the previous value and market expectations.
Strong data indicates that the US economy maintains a relative advantage among major developed economies, providing solid fundamental support for the US dollar.
Despite the New Zealand dollar's continued weakness in the face of a strong US dollar, the outlook for New Zealand's domestic monetary policy has provided some support for the exchange rate.
The market widely expects the Reserve Bank of New Zealand to raise the official cash rate (OCR) by 25 basis points to 2.5% at its July meeting.
This hawkish outlook is strongly supported by domestic inflationary pressures – the Consumer Price Index (CPI) remained stubbornly high at 3.1% year-on-year in the first quarter, consistently above the midpoint of the Reserve Bank of New Zealand’s 1%-3% inflation target range, forcing policymakers to take further action.
The Reserve Bank of New Zealand is one of the few developed economy central banks to maintain a tightening stance in 2026, and its policy divergence with other major central banks (especially those that may soon cut interest rates) could be beneficial to the New Zealand dollar in the medium term.
Goldman Sachs expects demand for the US dollar to weaken in 2026 due to declining attractiveness of US assets, providing support for G10 commodity currencies, including the New Zealand dollar. The RBNZ's policy shift towards a hawkish stance, with an expected start to its rate hike cycle this year, coupled with robust global economic growth (particularly boosted by recovering Chinese demand for dairy products and commodities), will support the New Zealand dollar's performance.
Morgan Stanley views the New Zealand dollar as one of the beneficiaries of the weak US dollar cycle in 2026, predicting a moderate appreciation of about 6-8% against the US dollar over the next 12 months, with a target range of 0.61-0.64.
The bank emphasized that the RBNZ's signal of shifting from easing to cautious tightening has significantly boosted market confidence, coupled with the substantial room for valuation recovery after the New Zealand dollar's previous overselling. The strong economic linkages between Australia and New Zealand mean that stabilizing commodity prices (dairy products, iron ore) will jointly support the ASX 200 sector.
According to the daily chart, the New Zealand dollar has begun a sharp and continuous decline against the US dollar in the short term, and the downtrend has been fully established. The moving average system has formed a bearish resistance, with the price breaking through all the moving averages: MA20, MA50, MA100, and MA200. The short-term MA20 (0.5815) has turned into strong resistance, and the medium and long-term moving averages are also declining in tandem, reinforcing the downtrend.
The MACD indicator's DIFF (-0.0050) continues to run below the DEA (-0.0032), with the green bars continuing to expand, indicating that bearish momentum is being released continuously, and there are currently no signs of a bottoming out or reversal. The RSI value has fallen to 29, approaching the oversold zone of 20, suggesting a short-term need for a slight technical rebound, but the overall downward structure remains unchanged.
In terms of price movement, after forming a double top at the previous high of 0.5993, the price continued to decline, successively breaking through the key support level of 0.5827 and hitting a new low of 0.5650. The previous low of 0.5679 has been breached, and there is no obvious dense support zone below, further opening up downside potential. The first resistance level above is the 20-day moving average (MA20) at 0.5815.
The overall market trend is dominated by bears. The short-term RSI oversold condition has only brought a slight rebound. When the price rebounds to the moving average resistance zone, the strategy should still be to sell on rallies. Only when the price stabilizes above the MA20 moving average and the MACD golden cross turns green can the continuous decline be alleviated.
(NZD/USD daily chart, source: FX678)
At 13:18 Beijing time on June 24, the New Zealand dollar was trading at 0.5655/56 against the US dollar.
Complex geopolitical tensions in the Middle East, coupled with strong US economic data, have boosted the US dollar, putting sustained downward pressure on the New Zealand dollar. However, widespread market expectations of a July rate hike by the Reserve Bank of New Zealand have provided some support for the New Zealand dollar.
Geopolitical risks and strong data are driving the dollar's strength.
The core reason for the recent continued weakness of the New Zealand dollar is the overall strength of the US dollar, and the rise of the US dollar is driven by two major factors.
Geopolitically, the situation in the Middle East presents complex and contradictory signals. US President Trump claimed that Iran had "fully and completely" agreed to open its facilities for nuclear inspections, but Iranian Foreign Minister Abbas Araqchi quickly responded that substantive nuclear negotiations had not yet begun, clearly downplaying market optimism about a rapid breakthrough between the US and Iran.
Meanwhile, Iran’s chief nuclear negotiator issued a stern warning, stating that the Strait of Hormuz “will never return to its pre-war state” and will always remain under Iran’s tight control, further exacerbating market concerns about energy supplies and regional stability.
However, positive signals also emerged from Washington—the US sponsored a new round of negotiations between Israel and Lebanon, aimed at facilitating a ceasefire agreement with Hezbollah, which is backed by Iran. This complex geopolitical situation has continued to support the US dollar as the world's primary safe-haven asset.
In terms of economic data, the preliminary readings of the US PMI for June exceeded expectations across the board, further solidifying the narrative of "American exceptionalism".
The S&P Global Composite PMI rose to 52.2, significantly higher than May's 51.5; the manufacturing output index jumped to 55.7, far exceeding the expected 54.8; and the services PMI recorded 51.3, also higher than the previous value and market expectations.
Strong data indicates that the US economy maintains a relative advantage among major developed economies, providing solid fundamental support for the US dollar.
RBNZ Rate Hike Expectations: Support for the New Zealand Dollar
Despite the New Zealand dollar's continued weakness in the face of a strong US dollar, the outlook for New Zealand's domestic monetary policy has provided some support for the exchange rate.
The market widely expects the Reserve Bank of New Zealand to raise the official cash rate (OCR) by 25 basis points to 2.5% at its July meeting.
This hawkish outlook is strongly supported by domestic inflationary pressures – the Consumer Price Index (CPI) remained stubbornly high at 3.1% year-on-year in the first quarter, consistently above the midpoint of the Reserve Bank of New Zealand’s 1%-3% inflation target range, forcing policymakers to take further action.
The Reserve Bank of New Zealand is one of the few developed economy central banks to maintain a tightening stance in 2026, and its policy divergence with other major central banks (especially those that may soon cut interest rates) could be beneficial to the New Zealand dollar in the medium term.
Institutional Views
Goldman Sachs expects demand for the US dollar to weaken in 2026 due to declining attractiveness of US assets, providing support for G10 commodity currencies, including the New Zealand dollar. The RBNZ's policy shift towards a hawkish stance, with an expected start to its rate hike cycle this year, coupled with robust global economic growth (particularly boosted by recovering Chinese demand for dairy products and commodities), will support the New Zealand dollar's performance.
Morgan Stanley views the New Zealand dollar as one of the beneficiaries of the weak US dollar cycle in 2026, predicting a moderate appreciation of about 6-8% against the US dollar over the next 12 months, with a target range of 0.61-0.64.
The bank emphasized that the RBNZ's signal of shifting from easing to cautious tightening has significantly boosted market confidence, coupled with the substantial room for valuation recovery after the New Zealand dollar's previous overselling. The strong economic linkages between Australia and New Zealand mean that stabilizing commodity prices (dairy products, iron ore) will jointly support the ASX 200 sector.
Technical Analysis
According to the daily chart, the New Zealand dollar has begun a sharp and continuous decline against the US dollar in the short term, and the downtrend has been fully established. The moving average system has formed a bearish resistance, with the price breaking through all the moving averages: MA20, MA50, MA100, and MA200. The short-term MA20 (0.5815) has turned into strong resistance, and the medium and long-term moving averages are also declining in tandem, reinforcing the downtrend.
The MACD indicator's DIFF (-0.0050) continues to run below the DEA (-0.0032), with the green bars continuing to expand, indicating that bearish momentum is being released continuously, and there are currently no signs of a bottoming out or reversal. The RSI value has fallen to 29, approaching the oversold zone of 20, suggesting a short-term need for a slight technical rebound, but the overall downward structure remains unchanged.
In terms of price movement, after forming a double top at the previous high of 0.5993, the price continued to decline, successively breaking through the key support level of 0.5827 and hitting a new low of 0.5650. The previous low of 0.5679 has been breached, and there is no obvious dense support zone below, further opening up downside potential. The first resistance level above is the 20-day moving average (MA20) at 0.5815.
The overall market trend is dominated by bears. The short-term RSI oversold condition has only brought a slight rebound. When the price rebounds to the moving average resistance zone, the strategy should still be to sell on rallies. Only when the price stabilizes above the MA20 moving average and the MACD golden cross turns green can the continuous decline be alleviated.
(NZD/USD daily chart, source: FX678)
At 13:18 Beijing time on June 24, the New Zealand dollar was trading at 0.5655/56 against the US dollar.
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