The NZD/USD exchange rate drifted to the highest point since February 16 as traders focused to the upcoming interest rate decision by the Reserve Bank of New Zealand. It jumped to a high of 0.6310, which was ~3.43% above the lowest point this year. The AUD/NZD pair, on the other hand, dropped to a low of 1.0717, which was much lower than the intraday high of 1.0792.
RBBZ interest rate decision
The AUD/NZD price dropped sharply on Tuesday as traders reacted to the latest decision by the Reserve Bank of Australia (RBA). As I wrote here, the RBA decided to leave interest rates unchanged in a bid to monitor the impact of the past rates. The bank was also worried that Australia’s economy was slowing because of high inflation and interest rates.
The next important NZD news will be the upcoming interest rate decision by the RBNZ scheduled for Wednesday morning. Economists believe that the RBNZ will continue hiking interest rates in a bid to fight the elevated inflation.
The median estimate is that the RBNZ will hike interest rates by 0.25% to 5.0%. If this happens, this rate will be the highest level since 2009. It will also be the smallest interest rate hike since November 2021 when the bank increased rates to 0.75%.
Another expectation is that the RBNZ is approaching the end of its hiking cycle considering that the economy is not doing well. The most recent data showed that New Zealand’s inflation rose to 7.2% in the fourth quarter, higher than RBNZ’s target of 2.0%. Retail sales dropped while the economy shrank by 0.6% in the fourth quarter.
AUD/NZD technical analysis
The AUD to NZD exchange rate pulled back after hitting the key resistance at 1.0791. This was a notable level because it coincides with the upper side of the blue channel. The pair also moved to the 25-period and 50-period moving averages.
It also declined below the 23.6% Fibonacci Retracement level while the Relative Strength Index moved below 50. Therefore, the pair will likely continue falling and retest the lower side of the channel at 1.0672 and then bounce back.
AUD/USD chart by TradingView
NZD/USD forecast
The NZD/USD pair continued rising ahead of the RBNZ decision. On the 4H chart, the pair is trading at an important resistance level, where it has struggled moving above since March. This price is also the upper side of the ascending triangle pattern. In price action analysis, this pattern is usually a bullish sign.
The price is also at the 38.2% Fibonacci Retracement level. Therefore, the pair will likely have a bullish breakout as buyers target the 50% retracement point at 0.6362.
NZD/USD chart by TradingView
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