Technical Analysis

NZDUSD moves above a swing area from earlier this year between 0.6184 and 0.6212

The RBNZ raise rates by 75 basis points and the statement was thought to be more hawkish. Below are some of the headlines

  • Monetary conditions need to tighten further
  • Remains resolute in achieving monetary policy remit
  • Productive capacity of the economy is being constrained by broad-based labour shortages, and wage pressures are evident
  • Core consumer price inflation too high, employment is beyond its maximum sustainable level,
  • Household spending remains resilient
  • Employment levels are high, and income growth and household savings are supporting spending
  • Committee agreed that the OCR needs to reach a higher level, and sooner than previously indicated,
  • Aggregate demand continues to outstrip New Zealand’s capacity to supply goods and services
  • Near-term inflation expectations have risen.
  • A range of indicators continue to signify broad-based inflation pressure

ANZ in New Zealand are tipping a 5.75% peak OCR, which is still 150bps away. The Reserve Bank of New Zealand next meet in 3 months time, on February 22.

NZDUSD dipped below the 200 hour MA after RBNZ decision

The NZDUSD initially moved lower, on the decision, and the move lower briefly dipped below the 200 hour moving average. Recall from Monday and Tuesday, the price stalled against that moving average level and bounced higher. .

Today, the quick move back to the upside was given a boost in the New York morning session as the dollar got sold off on weaker initial jobless claims and weaker S&P global PMI service and manufacturing PMI data. That boost (USD selling) took the NZDUSD pair back to the upside. The price breached the highs from last week between 0.61934 and 0.62056 (see yellow area and red numbered circles in the chart above). That area is now close risk. Stay above is more bullish.

Taking a broader look at the daily chart, the 50% midpoint of the 2022 trading range comes in at 0.62719. Above that is the falling 200 day moving average at 0.6302. Those levels are now key target levels to get to and through on increased upside momentum.

On the downside, the support from the hourly chart (at 0.6193) can be extended down to 0.6184. That would encompass other swing levels going back to May, June, July, and August (see red numbered circles on the chart below). Traders looking for higher prices would probably use that area as a close risk defining level on the break higher today. Stay above is more bullish. Move below and we could see disappointment from the failed break today.

NZDUSD moves to the highest level since August

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