NZD/USD Lower as Traders Fade RBNZ Rate Hike News

The New Zealand Dollar is trading lower against its U.S. counterpart on Wednesday after failing to hold onto earlier gains. The Kiwi jumped to its highest level since April 7 after the Reserve Bank of New Zealand (RBNZ) raised interest rates by a hefty 50 basis points to 1.50%.

Sellers came in after the early surge in prices because the move wasn’t a complete surprise. All 21 economists in a Reuters poll had expected the RBNZ to hike rates. Fifteen had forecast a 25 basis point increase while the rest had expected a 50 basis point hike.

At 05:34 GMT, the NZD/USD is trading .6824, down 0.0027 or -0.39%.

The price action also suggests Kiwi traders are worried about a series of aggressive rate hikes by the U.S. Federal Reserve, beginning in May with a 50-basis point rate hike.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6806 will signal a resumption of the downtrend. A move through .7034 will change the main trend to up.

The resistance is a long-term retracement zone at .6874 to .6955. Inside this zone is minor pivot resistance at .6920.

The short-term range is .6631 to .7034. The NZD/USD is currently testing its retracement zone at .6833 to .6785.

The intermediate-term support is the retracement zone at .6764 to .6708.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the 50% level at .6833.

Bearish Scenario

A sustained move under .6833 will indicate the presence of sellers. Taking out .6806 will signal a resumption of the downtrend with the support cluster at .6785 to .6746 the next target.

Look for counter-trend buyers to show up on the first test of the support cluster, but if .6746 fails then look for the selling to possibly extend into the main bottom at .6729, followed by the Fibonacci level at .6708.

Bullish Scenario

A sustained move over .6833 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into the major 50% level at .6874, followed by the intraday high at .6902.