The New Zealand dollar rose to a fresh yearly high of 0.6640 against the greenback at the beginning of the week, but tumbled sharply lower following the RBNZ rate decision on Wednesday, and the NZD/USD may continue to hold a broad range over the near-term as investors weigh the outlook for future policy.
[B]Currency Pair:[/B] NZD/USD
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis[/U][/B]
The New Zealand dollar rose to a fresh yearly high of 0.6640 against the greenback at the beginning of the week, but tumbled sharply lower following the RBNZ rate decision on Wednesday, and the NZD/USD may continue to hold a broad range over the near-term as investors weigh the outlook for future policy. After reaching a high of 0.7220 in August, the kiwi-dollar tumbled to a low of 0.4894 in March as Governor Alan Bollard lowered the benchmark interest rate at a record pace however, the rebound in risk appetite paired with speculation for higher borrowing costs may continue to drive the pair higher throughout the second half of the year. Nevertheless, as Governor Alan Bollard maintains a dovish outlook for inflation and continues to see scope for lower borrowing costs going forward, speculation for further easing could weigh on the exchange rate as the appreciation in the exchange rate hampers the prospects for an ‘export-led’ recovery. Over the next few hours of trading, we may see the NZD/USD continue to push higher following the rebound in commodity prices however, as the RSI approaches overbought territory, gains are likely to be capped and we may see the pair continue to trade along the 120 SMA at 0.6560 during the overnight. At the same time, the U.S. GDP report due out later today is likely to spark volatility in the currency market as economists forecast the growth rate to contract at an annual rate of 1.5% in the second quarter, and a dismal reading could spark demands for safe-haven flows as investors weigh the outlook for global growth. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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