On Wednesday, the NZDUSD currency pair embarked on a downward journey, hitting its lowest mark in almost a fortnight. This movement came hot on the heels of the Reserve Bank of New Zealand’s (RBNZ) latest decision on interest rates. The RBNZ opted to maintain its cash rate at 5.5% for the fifth consecutive meeting, a move that was widely anticipated.
However, the post-decision commentary didn’t quite match the hawkish anticipation. The central bank acknowledged strides in curbing inflation, expressing a more balanced perspective on inflation risks. Consequently, it revised its projected peak in rates from 5.7% to 5.6%. Meanwhile, over in the US, the market didn’t seem overly fazed by a larger-than-expected drop in durable goods orders, choosing instead to await eagerly the impending release of crucial PCE data later in the week.
Technical
On the 4H chart, the recent bearish momentum triggered a breakdown of the descending channel, with the price breaching the 61.8% Fibonacci golden ratio at 0.6114. The 25-SMA (green line) still trades above the 50-SMA (blue line), and with the RSI nearing oversold conditions, the price could be due for a retracement in the upcoming sessions.
Support at 0.6095 is now in focus and could be the pivot point that triggers the pullback. However, if the currency pair continues its downward descent below this support, it could reach 0.6083 and a psychological demand zone near 0.6051.
However, if the support at 0.6083 holds, the price could retest the resistance at 0.6114 before reaching the 100-SMA (orange line) near the Fibonacci midpoint of 0.6134, where the sustainability of the recent breakdown will be tested. This resistance could be challenging to breach, but if the pair manages to clear the threshold, its bullish momentum could continue toward 0.6155.
Summary
The NZDUSD currency pair experienced a slump on Wednesday following the latest decision from the RBNZ to keep its rates unchanged. Support at 0.6095 could be in focus in the upcoming sessions to determine whether the selling pressure will be sustained.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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