NZD/USD Analysis: Risk aversion hits NZD despite Q1 GDP surge
2025-06-19 18:07:41
During the European trading session on Thursday (June 19), NZD/USD fell nearly 1%, trading around 0.5976.
New Zealand's economy performed better than expected in the first quarter, but judging by the reaction of the New Zealand dollar, the market does not seem to be buying it. The New Zealand dollar/US dollar exchange rate fell sharply on Thursday as risk appetite plummeted due to geopolitical tensions, triggering a technical bearish breakout and the downward trend may continue further.
New Zealand's economy may have started 2025 on a strong note, but that wasn't enough to support the New Zealand dollar on Thursday. The NZD/USD exchange rate fell to multi-week lows as risk aversion returned. After breaking below a key downside level, the pair could see further losses if risk appetite continues to deteriorate.
Strong growth is a thing of the past
New Zealand's economy grew by 0.8% quarter-on-quarter in the first quarter, much higher than the 0.4% forecast by the Reserve Bank of New Zealand (RBNZ), with growth momentum concentrated in the commodity production sector. Despite the impressive quarterly data, annual GDP still fell by 1.1%, indicating that the overall economic environment remains fragile.
Manufacturing rebounded 2.4%, driven by the transportation equipment and machinery industry; business services also grew by 2.4% due to a rebound in IT-related activities; healthcare grew steadily for the second consecutive quarter, up 1.4%; the goods production industry rebounded 1.3% after a sharp drop in the fourth quarter, becoming a key driver of the unexpected growth; the service industry, which accounts for 73.6% of GDP, performed weakly, with an overall growth of only 0.4%.
Although the data exceeded market and central bank expectations, traders viewed it as a "historical document" with little relevance to current market conditions.
NZD/USD breaks down
The downside risk to NZD/USD that was warned earlier this week has materialized, with the exchange rate falling to its lowest level since early June. The decline was not driven by the NZD itself, but by a headline that the US was preparing to launch an attack on Iran "in the coming days". This news was enough to push NZD/USD below the channel support level that it had tested in the previous few days, completely suppressing the bullish power below the 0.6000 mark.
Technical indicators performance
(New Zealand dollar/US dollar daily chart source: Yihuitong)
Technical analysis of the daily chart shows that the currency pair has fallen below the lower track of the ascending channel pattern, forming a bearish trend;
The 14-day relative strength index (RSI) continued to decline and fell below 50;
The Moving Average Convergence Divergence (MACD) indicator, while still above zero, has crossed over its signal line and started to turn around, suggesting that while it has not yet turned completely bearish, momentum is shifting in that direction.
Downward key points to watch
50-day moving average (0.5925, where the NZD rebounded in late May);
0.5900 mark;
The important 200-day moving average;
The 0.5990 level, which had previously acted as support, could turn into resistance if the bearish breakout reverses.
At 17:59 Beijing time, the New York dollar was at 0.5974/76, down 0.88%.
New Zealand's economy performed better than expected in the first quarter, but judging by the reaction of the New Zealand dollar, the market does not seem to be buying it. The New Zealand dollar/US dollar exchange rate fell sharply on Thursday as risk appetite plummeted due to geopolitical tensions, triggering a technical bearish breakout and the downward trend may continue further.
New Zealand's economy may have started 2025 on a strong note, but that wasn't enough to support the New Zealand dollar on Thursday. The NZD/USD exchange rate fell to multi-week lows as risk aversion returned. After breaking below a key downside level, the pair could see further losses if risk appetite continues to deteriorate.
Strong growth is a thing of the past
New Zealand's economy grew by 0.8% quarter-on-quarter in the first quarter, much higher than the 0.4% forecast by the Reserve Bank of New Zealand (RBNZ), with growth momentum concentrated in the commodity production sector. Despite the impressive quarterly data, annual GDP still fell by 1.1%, indicating that the overall economic environment remains fragile.
Manufacturing rebounded 2.4%, driven by the transportation equipment and machinery industry; business services also grew by 2.4% due to a rebound in IT-related activities; healthcare grew steadily for the second consecutive quarter, up 1.4%; the goods production industry rebounded 1.3% after a sharp drop in the fourth quarter, becoming a key driver of the unexpected growth; the service industry, which accounts for 73.6% of GDP, performed weakly, with an overall growth of only 0.4%.
Although the data exceeded market and central bank expectations, traders viewed it as a "historical document" with little relevance to current market conditions.
NZD/USD breaks down
The downside risk to NZD/USD that was warned earlier this week has materialized, with the exchange rate falling to its lowest level since early June. The decline was not driven by the NZD itself, but by a headline that the US was preparing to launch an attack on Iran "in the coming days". This news was enough to push NZD/USD below the channel support level that it had tested in the previous few days, completely suppressing the bullish power below the 0.6000 mark.
Technical indicators performance
(New Zealand dollar/US dollar daily chart source: Yihuitong)
Technical analysis of the daily chart shows that the currency pair has fallen below the lower track of the ascending channel pattern, forming a bearish trend;
The 14-day relative strength index (RSI) continued to decline and fell below 50;
The Moving Average Convergence Divergence (MACD) indicator, while still above zero, has crossed over its signal line and started to turn around, suggesting that while it has not yet turned completely bearish, momentum is shifting in that direction.
Downward key points to watch
50-day moving average (0.5925, where the NZD rebounded in late May);
0.5900 mark;
The important 200-day moving average;
The 0.5990 level, which had previously acted as support, could turn into resistance if the bearish breakout reverses.
At 17:59 Beijing time, the New York dollar was at 0.5974/76, down 0.88%.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
