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This morning the Reserve Bank of New Zealand (RBNZ) decided to keep interest rates unchanged at 5.5%:
→ the decision to keep the interest rate at this high level is made for the sixth time in a row;
→ the RBNZ said rates should remain high for some time to ensure inflation is contained;
→ this decision was expected – all 25 economists in the Bloomberg survey predicted it.
However, New Zealand’s economy is in recession, with GDP contracting in four of the last five quarters — prompting market participants to speculate that the central bank will begin cutting rates in the second half of this year.
The market reaction was a slight strengthening of the New Zealand dollar. Thus, the NZD/USD rate today rose to its April high.
Technical analysis of the NZD/USD chart today shows that:
→ in 2024, there is some preponderance on the bearish side of the market, which is expressed by the formation of a downward channel (shown in red);
→ starting from the first of April, an upward impulse was formed (shown by blue lines), which allowed the price of NZD/USD to rise from the low of the year and reach the upper half of the red channel;
The level 0.60777 looks like current resistance, since it:
→ previously provided support (shown by blue arrows);
→ acts as an obstacle to growth within the blue lines (shown by the red arrow), as evidenced by the action of the NZD/USD price on April 9-10.
At the same time, the RSI indicator is in the overbought zone.
From a technical analysis perspective, the market is vulnerable to a pullback. The further development of the dynamics of the NZD/USD exchange rate today will have an important impact (will be published at 15:30 GMT+3) on the news about the inflation level in the US, which we wrote about yesterday.
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