NZD/USD Steady Ahead of RBA, Fed Expected Rate Hikes

The New Zealand Dollar is edging higher early Tuesday as a widely expected 50-basis point rate hike by the Federal Reserve on Wednesday is completely overshadowing the prospect of higher domestic interest rates. Following a 6.9% drop in April, the Kiwi is now threatening to challenge a key support at .6200.

At 03:39 GMT, the NZD/USD is trading .6456, up 0.0021 or +0.33%.

Kiwi Traders Focusing on RBA, Fed Rate Decisions

Today’s trade is a little tentative ahead of the Reserve Bank of Australia’s (RBA) interest rate and monetary policy decisions at 04:30 GMT. Markets are wagering heavily for a move to 0.25% at the meeting, and then hike every month to around 2.5% by Christmas.

NZD/USD traders are also monitoring the U.S. Federal Reserve which is even more hawkish with 150 basis points of hikes priced in by the end of July and rates at 3% or more by year end.

Economic News: New Zealanders Keep Building Homes

Earlier today, Stats NZ reported house building consents continue to smash records, with numbers up 24 percent in the year to March to hit 50,858 residential units for the first time. Stats NZ said never before had New Zealand exceeded 50,000 consents issued in a year – and most consents result in new buildings.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6413 will signal a resumption of the downtrend. The main trend will change to up on a move through .6902.

The minor trend is also down. A trade through .6646 will change the minor trend to up. This will also shift momentum to the upside.

The NZD/USD is currently trading on the weak side of a long-term 50% level at .6467, making it resistance. This is followed by minor pivot resistance at .6530.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Tuesday is likely to be determined by trader reaction to .6467.

Bullish Scenario

A sustained move over .6467 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the next pivot at .6530.

Bearish Scenario

A sustained move under .6467 will signal the presence of sellers. This could lead to a retest of .6413, followed by the June 15, 2020 main bottom at .6381. This is a potential trigger point for an acceleration to the downside.