The NZD/USD price moved sideways on Wednesday even after the latest interest rate decision by the Reserve Bank of New Zealand (RBNZ). The pair rose to a high of 0.5800 and then pulled back to the current 0.5700. This price is about 2.6% above its lowest level this year.
RBNZ interest rate decision
The RBN became the second major central bank to deliver its decision this week after the Reserve Bank of Australia (RBA). In its decision, the bank decided to hike interest rates by 0.50% for the fifth straight time as it continues to battle the red-hot inflation.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
The RBNZ pushed interest rates to 3.5%, the highest level in years. It is also the most aggressive that the bank has been since 1999. At the same time, the bank warned that more hikes were on the way. As a result, analysts believe that the rate hike cycle will peak at 4.25% in early 2023.
The RBNZ has embraced a more hawkish tone after the country’s inflation surged to the highest level in 32 years. It also means that the bank has started to diverge from the RBA. On Tuesday, the RBA surprised the market by delivering a 25 basis point hike. Analysts expect that the RBNZ will slow its hiking cycle. In a statement, analysts at Bloomberg said:
“The RBNZ’s outlook has not fully adjusted to global growth risks and an easing in inflation pressures. We think the RBNZ will shift to smaller rate hikes over coming months as it approaches the end of its tightening cycle.”
The next key catalyst for the NZD/USD price will be the upcoming American non-farm payrolls (NFP) data. Analysts expect that economy continued adding more jobs in September, as we wrote in this article.
NZD/USD forecast
The four-hour chart shows that the NZD/USD forex price has been in a tight range in the past few days. It has managed to move from the year-to-date low of 0.5565 to the current 0.5700. The pair has formed a small ascending channel or rising wedge that is shown in yellow. Also, the Relative Strength Index (RSI) has kept rising.
Therefore, the pair will likely have a bearish breakout in the coming days. If this happens, the next key support level to watch will be ay 0.5500.
Invest in crypto, stocks, ETFs & more in minutes with our preferred broker, eToro.
10/10
68% of retail CFD accounts lose money