Should the RBNZ surprise markets with a 25 bps rate hike or raise the forecast for the peak rate to 6.0%, the New Zealand Dollar is likely to meet a fresh buying wave against the US Dollar. In case of any hawkish surprises, the NZD/USD pair could stage a solid rebound toward the 0.6250 level.
On the other hand, if RBNZ Governor Orr’s comments are balanced, suggesting a “higher for longer” interest rate view, the NZD/USD correction is expected to gain traction, knocking the pair down toward the 0.6100 barrier. Additionally, a dovish pause by the central bank could also spell doom for the Kiwi.
Dhwani Mehta, FXStreet’s Senior Analyst, offers a brief technical outlook for trading the New Zealand Dollar on the RBNZ policy announcements: “The NZD/USD pair is battling the critical 50-day Simple Moving Average (SMA) at 0.6180 on its corrective downside. The 14-day Relative Strength Index (RSI) indicator, however, is still holding above the midline, suggesting that risks remain skewed to the upside for the pair.”
“The immediate upside hurdle is seen at the 0.6220 round level, above which the July 27 high of 0.6274 will come into play. NZD buyers will then aim for the 0.6300 figure. Conversely, a sustained move below the 50-day SMA at 0.6180 could open doors for a test of the 0.6100 mark. Further south, the 200-day SMA at 0.6075 could come to the rescue of NZD/USD,” Dhwani adds.
