NZD/USD Forex Technical Analysis – RBNZ Raises Official Cash Rate by 50bps as Expected

The New Zealand Dollar is trading nearly flat on Wednesday after the Reserve Bank (RBNZ) raised interest rates by 50 basis points to a more than 14-year high of 4.75%, and said it expects to keep tightening further as inflation remains too high. Initially, traders read the move as bullish, driving the currency to .6246, but it has since given back those earlier gains.

The decision was largely in line with a Reuters poll, in which 20 of the 25 economists forecast a 50-basis-point rate hike.

At 02:28 GMT, the NZD/USD is trading .6222, up 0.0009 or +0.14%.

Additionally, the RBNZ said it was too early to assess the policy implications of a devastating cyclone and floods in the country’s North Island, and expects to look past the short-term price pressures stemming from the weather events.

The focus now shifts towards the Fed minutes that are scheduled to be released at 19:00 GMT. Traders are hoping they offer some clues as to the expected length of the Federal Reserve’s interest rate hiking campaign.

Daily NZD/USD Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6194 will signal a resumption of the downtrend. A move through .6389 will change the main trend to up.

The NZD/USD is currently straddling a long-term Fibonacci level at .6231.

The nearest resistance is a minor pivot at .6292. The closest support is the Nov. 28 main bottom at .6156.

Daily NZD/USD Technical Forecast

Trader reaction to .6231 is likely to determine the direction of the NZD/USD on Wednesday.

Bullish Scenario

A sustained move over .6232 will indicate the presence of buyers. If this generates enough upside momentum then look for a surge into the minor pivot at .6292.

Bearish Scenario

A sustained move under .6231 will signal the presence of sellers. If this creates enough downside momentum then look for a test of the main bottom at .6191, followed by the main bottom at .6156.