Top Story

NZD/USD could extend drop on RBNZ inaction

The US dollar remains among the strongest of currencies out there. Not only is it finding support from safe haven flows amid the current stock market weakness, but it is also in demand due to the growing disparity between monetary policies in the US against other major economies. Whereas the Federal Reserve is well into its tightening cycle, and is planning two additional rate increases in the second of half of this year, other central banks are still keeping interest rates at their historically low levels.

One such central bank is the Reserve Bank of New Zealand, which is due to make a rate decision later on this evening at 22:00 GMT. The RBNZ is widely expected to keep interest rates unchanged at 1.75%. It last changed rates back in November 2016, when the benchmark Official Cash Rate (OCR) was trimmed from 2.0% to its current rate. Unless the RBNZ hints at a near future hike, the NZD/USD could extend its declines further.

Reflecting the NZD/USD’s bearish trend, the 200-day moving average is pointing lower, with the faster 21 day exponential and 50 day simple averages having even steeper slopes. The Kiwi has also broken its long term up trend and has created a few lower highs and a lower low, too. Most recently, it failed to hold above the 0.6900 support. Thus, the path of least resistance remains to the downside as things stand.

The abovementioned broken 0.6900 level is now the most important resistance to watch – for as long as rates remain below this level, the short-term bias would be bearish. At the time of writing, the Kiwi was trying to break away from the next support at 0.6830. If the bears succeed here then there are little further horizontal supports in sight, which means the sell-off could accelerate. In this case, the bear’s next objective would become the 61.8% Fibonacci level at 0.6715.

Source: eSignal and

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.