The Impact of RBNZ Policy Decision on NZD/USD Pair
The NZD/USD pair has hit a monthly low near the significant support level of 0.6100 as traders brace themselves for the upcoming Reserve Bank of New Zealand (RBNZ) policy decision. Here’s what you need to know:
RBNZ Expected to Cut OCR
- The RBNZ is anticipated to reduce its Official Cash Rate (OCR) by 50 basis points to 4.75%.
- This move is aimed at stimulating economic growth and follows a previous unexpected rate cut of 25 bps in August.
US Inflation Data and Fed Interest Rate Outlook
- Investors are eagerly waiting for the release of US Consumer Price Index (CPI) data for September.
- The CPI data will provide insights into the Federal Reserve’s interest rate outlook for the rest of the year.
- The core CPI, which excludes volatile food and energy prices, is expected to show a steady growth of 3.2%.
Despite these events, the NZD/USD pair continues to weaken, with the Kiwi finding temporary support near the 200-day Exponential Moving Average (EMA) around 0.6100. Let’s delve deeper into the technical analysis:
Technical Analysis
- The 14-day Relative Strength Index (RSI) is hovering near the 40.00 level, indicating a bearish momentum.
- If the pair breaks below the horizontal support at 0.6100, it could see further downside towards the May 3 high of 0.6046 and the psychological support level of 0.6000.
- Conversely, a reversal move above the 20-day EMA at 0.6230 could drive the pair towards the September 3 high of 0.6302 and September 30 high near 0.6380.
NZD/USD Daily Chart
Economic Indicator: RBNZ Interest Rate Decision
The Reserve Bank of New Zealand (RBNZ) announces its interest rate decision after its scheduled policy meetings. Here’s how it can impact the NZD:
- If the RBNZ is hawkish and sees rising inflationary pressures, it may raise the OCR, attracting capital inflows and strengthening the NZD.
- Conversely, if the RBNZ lowers the OCR due to low inflation, it could weaken the NZD.
Stay tuned for the RBNZ’s upcoming decision and the latest market updates.
Analysis:
The RBNZ’s policy decision and the US inflation data have significant implications for the NZD/USD pair and global markets. Investors should closely monitor these events to make informed decisions regarding their investments and financial strategies. The technical analysis of the pair provides valuable insights into potential price movements and key support and resistance levels to watch. Understanding these factors is crucial for both seasoned traders and beginners looking to navigate the complex world of forex trading. Stay informed, stay ahead, and make data-driven decisions to secure your financial future.