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      RBNZ Must Deliver Deeper Cut to Counter Economic Reversal

      Eva Chen

      Economic

      Forex

      Summary:

      New Zealand’s economy contracted 0.9% QoQ, prompting the kiwi to crater as traders price a 50 bp RBNZ reduction at the next OCR review. The outsized shrinkage has turbo-charged bets on an accelerated easing cycle.

      Buy

      EURNZD

      EXP
      Trading

      2.00171

      Entry Price

      2.03770

      TP

      1.98900

      SL

      2.00362 +0.02210 +1.12%

      0

      Point

      Flat

      1.98900

      SL

      CLOSING

      2.00171

      Entry Price

      2.03770

      TP

      Fundamentals

      EURNZD, after a powerful Thursday rally, has eased back to re-test the 20 August support zone. Volatility is being driven by a fresh deterioration in domestic data. Q2 GDP slumped 0.9% QoQ, far deeper than the median forecast of –0.3%, confirming the slowdown has morphed into a technical recession—activity has now fallen in three of the past five quarters. The breadth of the decline—ten of sixteen industries contracting—signals mounting headwinds that are likely to force the Reserve Bank of New Zealand (RBNB) into a more aggressive easing trajectory.
      Goods-producing industries led the retreat, down 2.3%, with primary industries off 0.7% and services output flat. “The 0.9% contraction is broad-based; manufacturing—down 3.5%—was the largest drag, while construction reversed its Q1 bounce with a 1.8% fall,” said economic growth spokesperson Atwell. Per-capita GDP shrank 1.1%, underscoring the intensity of the downturn.
      Market view: The economy did not merely stagnate—it abruptly reversed. The 0.9% drop eclipsed every major forecast, and the per-capita print is even bleaker. The data reinforce that the current monetary stance is insufficient; a 50 bp OCR cut in October is now required, and the RBNZ must demonstrate decisive leadership.
      RBNZ Must Deliver Deeper Cut to Counter Economic Reversal_1

      Technical Analysis

      The kiwi was heavily offered across the board post-release, with EURNZD surging. Technically, the sharp advance has cleared most upside obstacles. Provided the current pullback holds the 20 August support, a fresh leg higher can target the key resistance at 2.0377.

      Trading Recommendations

      Trading Direction: Buy
      Entry Price: 1.9978
      Target Price: 2.0377
      Stop Loss: 1.9890
      Valid Until: October 4, 2025, 23:55:00
      Support: 1.9997/1.9917/1.9862
      Resistance: 2.0077/2.0175/2.0225
      Risk Warnings and Investment Disclaimers
      You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.

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