Technical Analysis of NZDUSD
The NZDUSD currency pair has been experiencing volatile price movements as traders await the Reserve Bank of New Zealand's (RBNZ) decision on interest rates. The market is currently characterized by mixed signals regarding potential rate changes, leading to uncertainty among traders.
Recent Price Action
Today, the NZDUSD initially rose following the Reserve Bank of Australia's (RBA) decision to maintain its interest rate, which was unexpected as many anticipated a 25 basis point cut. However, this upward momentum was short-lived as the pair reversed direction due to renewed buying of the US dollar, briefly turning negative for the day. As of the latest updates, the pair has recovered slightly, showing a modest increase of 0.08% and hovering around unchanged levels as traders position themselves ahead of the RBNZ's rate decision.
RBNZ Rate Decision Expectations
The RBNZ is widely expected to keep the Official Cash Rate (OCR) steady at 3.25%, following a series of cuts totaling 225 basis points from its previous peak of 5.5%. The majority of members from the NZIER Monetary Policy Shadow Board support this decision, citing mixed signals on inflation and global economic uncertainty. Most analysts believe that the monetary easing cycle is nearing its conclusion, with the OCR likely to remain between 2.75% and 3.25% over the next year. However, there are differing opinions, with some members advocating for further cuts to bolster the domestic economy.
Technical Analysis Overview
From a technical perspective, the 4-hour chart indicates that the NZDUSD fell below both the 100-bar and 200-bar moving averages yesterday. During the Asia-Pacific session today, the pair briefly reclaimed the 200-bar moving average but faced resistance near the 100-bar moving average, currently positioned around 0.6033. Following this, sellers pushed the price lower, causing it to dip below the 50% retracement level of the upward move from the May low at 0.5982, with a session low recorded at 0.59782.
Key Technical Levels
The critical range for traders is established between the 50% retracement level at 0.5982 and the 100-bar moving average at 0.6033. A breakout above 0.6033 would indicate a bullish bias, while a drop below 0.5982 could lead to further downside, targeting the 61.8% retracement level at 0.5950, followed by a significant swing area between 0.5882 and 0.5893.
Current Market Sentiment
At present, the market sentiment appears slightly bearish, as the price remains below the moving average levels. However, it is important to note that the price is closer to the highs observed since October 2024, indicating that both buyers and sellers need to demonstrate their strength. A move below the 50% retracement level would grant sellers greater control, while a rise above the 100-bar moving average would suggest a return of buyer dominance.
Traders are advised to monitor these key levels closely as they will play a crucial role in determining market direction leading up to and following the RBNZ's decision.