The New Zealand Dollar (NZD) is under pressure against the US Dollar (USD), with the NZD/USD pair falling by 0.25% on Monday. At the time of writing, the pair is trading around 0.5680, despite growing expectations of an interest rate hike by the Reserve Bank of New Zealand (RBNZ).
TD Securities has revised its forecast, now expecting the RBNZ to raise the Official Cash Rate by 25 basis points at its upcoming meeting this week, bringing it to 3%. The firm also anticipates further hikes in December and February, pushing the terminal rate to 3.50%. This shift in policy outlook comes as New Zealand's inflation eased slightly more than expected in the third quarter but is expected to accelerate in the fourth quarter, potentially exceeding the RBNZ's target range of 1% to 3%.
Meanwhile, the US Dollar remains under pressure as markets widely expect the Federal Reserve to leave interest rates unchanged at its October 27-28 policy meeting. The CME FedWatch tool indicates a 90% chance of a rate hold in October, with a 79% likelihood of another hike in December. This potential divergence in monetary policies between the RBNZ and the Fed could influence the direction of the NZD/USD pair.
Investors are also keeping a close eye on upcoming US economic releases, including the Personal Consumption Expenditures (PCE) Price Index and preliminary third-quarter Gross Domestic Product (GDP) figures. These indicators could shape expectations for future US interest rates and impact the US Dollar's strength.
Technically, NZD/USD is trading at 0.5687 in the one-hour chart, caught between its major moving averages. The pair holds above the 200-period simple moving average (SMA) at 0.5665 but trades just beneath the 100-period SMA at 0.5689, suggesting a capped intraday tone within an overall supported structure. The Relative Strength Index (14) at 47.2 indicates consolidative momentum after a recent pullback from the 0.5700 area.