The New Zealand Dollar is trading sharply higher early Wednesday after the Reserve Bank (RBNZ) Monetary Policy Committee decided to keep the Official Cash Rate (OCR) at 1.0 percent. Policymakers said that employment remains around its maximum sustainable level while inflation remains below the 2 percent target mid-point but within our target range. Additionally, economic developments do not warrant a change to the already stimulatory monetary setting at this time.
Furthermore, economic growth continued to slow in mid-2019 reflecting weak business investment and soft household spending. We expect economic growth to remain subdued over the remainder of the calendar year. We will continue to monitor economic developments and remain prepared to act as required.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="At 01:12 GMT, the NZD/USD is trading .6412, up 0.0083 or 1.31%.” data-reactid=”13″>At 01:12 GMT, the NZD/USD is trading .6412, up 0.0083 or 1.31%.
The early strength represents short-covering as many traders were caught on the wrong side of the RBNZ decision. Traders appeared to be betting heavily on a rate cut despite indications from the forward interest rate markets that the odds of such a move are substantially less, about 64% at the start of the week.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6466 will change the main trend to up. A move through .6322 will signal a resumption of the downtrend.
The short-term range is .6204 to .6466. Its retracement zone at .6335 to .6304 provided support the last four days, stopping the selling at .6322 on November 8.
The intermediate range is .6588 to .6204. Its retracement zone at .6396 to .6441 is the first target zone. It is currently being tested. Buyers are going to have to overcome the upper or Fibonacci level of this zone at .6441 in order to take a shot at the main top at .6466.
The main range is .6791 to .6204. A change in trend to up on a move through .6466 is likely to lead to a test of its retracement zone at .6498 to .6567. Trader reaction to this zone will determine the longer-term direction of the NZD/USD.
Daily Swing Chart Technical Forecast
Based on the early price action in reaction to the RBNZ decision, the direction of the NZD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the intermediate 50% level at .6396.
A sustained move over .6396 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the intermediate Fibonacci level at .6441, followed by the main top at .6466.
A sustained move under .6396 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the short-term 50% level at .6335.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This article was originally posted on FX Empire” data-reactid=”37″>This article was originally posted on FX Empire
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