NZD/USD: Bearish Signals Post RBNZ On Hold Decision

The New Zealand dollar is now quiet against the U.S. dollar after closing higher following Reserve Bank of New Zealand’s decision to keep rates on hold. The central bank maintained a neutral policy stance and left the official cash rate at 1.75% as it was widely expected. The accompanying statement had not enough information for market participants to gauge changes on RBNZ’s thoughts since the last policy meeting and the RBNZ Governor Graeme’s last speech earlier in March. Overall, the central bank expects the case rate to remain low for a longer period of time, even until 2018, according to the statements done in February. Even though the policymakers are optimistic about the domestic economy, the risks to the downside around the global environment continue to exist. No other market driver reports are expected from New Zealand this week and the only scheduled indicators for next week is the ANZ Business Confidence. Thus, we would expect the U.S. dollar to be the dominant currency of the NZD/USD pair in the next days.



NZD/USD Technical Outlook

The New Zealand dollar traded near its opening level against the U.S. dollar over the last two trading sessions. Meanwhile, the RBNZ left interest rates unchanged and failed to drive the NZD/USD pair in either direction as it had no effect on the price action. On Tuesday, the commodity currency pair printed a new 20-day low and reached the 0.7090 resistance barrier which is near with the 100-daily SMA. Additionally, this week will be probably being the second bullish week in a row as the upward buying interest began from the rebound on the 0.6890 support barrier.

The price is developing within a downward sloping channel for more than nine months. The next level to watch is the 0.7130 to the upside which overlaps with the 50-daily SMA. The bearish crossover that has been observed between the 50 and 200 daily SMA will be a significant obstacle for the bulls so, our expectation is a pullback on the latter level and a continuation of the downward tendency. Another possible scenario is a bearish move from the current market price until 0.6890. The Relative Strength Index (RSI) is flattening near its neutral area whilst the stochastic oscillator is moving lower. Both are confirming the negative movement.