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18.03.2025 11:36 AM
Positive Data from China and Rising Risk Appetite Support a Bullish Outlook for the Kiwi – NZD/USD Analysis

The New Zealand dollar (NZD) has gained another strong bullish factor as the ANX Commodity Price Index recorded another solid increase in February, rising 3.0% month-on-month (m/m) and 14% year-on-year (y/y). If the trade war bypasses New Zealand, the country's trade balance will remain consistently in surplus, helping to stabilize the domestic economy faster and return to a growth trajectory.

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Market participants interpreted the latest economic data positively, making the Kiwi the best-performing major currency on Monday.

The rally was supported by upbeat economic data from China, where retail sales, industrial production, and fixed asset investment all exceeded forecasts. Another positive factor for NZD is the broad increase in risk appetite, as the potential for de-escalating geopolitical tensions has emerged.

On Wednesday evening, the final Q4 GDP report will be released, with the primary focus on private consumption trends, as this indicator reflects the recovery of consumer demand. If the data meets or exceeds expectations, NZD could receive another bullish signal.

Following the resignation of Adrian Orr as RBNZ Governor, the Reserve Bank of New Zealand is expected to take a more cautious, conservative approach, which is also supportive of the Kiwi—a potential rate cut may slow down. Overall, NZD has a chance to take advantage of favorable market conditions and continue its upward momentum.

Speculative positioning remains bearish, but the net short position on NZD slightly decreased by $134 million to -$3.026 billion over the reporting week. Short-term factors continue to support the Kiwi's rally, and the fair value estimate has accelerated upward.

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Technical Outlook for NZD/USD

NZD/USD is attempting to extend its corrective rally, fueled by positive external factors, and has approached key technical resistance at 0.5839. A break above this level is likely, as this scenario appears more probable than another downside retracement.

The next resistance zone and upside target lies at 0.5920/40, but further gains depend on a combination of factors, primarily continued demand for risk assets.

Key support is at 0.5768, and any pullback to this level could be used as a buying opportunity. While the bullish momentum remains intact, it is driven primarily by external factors, meaning the duration of NZD/USD's rally will depend on how long the favorable external environment persists.

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