RBNZ rate hike expected on Wednesday
The NZDUSD is trading at its lowest level since mid-November today. The low price reached 0.69454. If you come back in March, the low has fallen to 0.6941.
Since then, other swing troughs have happened to:
- 0.6911 in june
- 0.6880 in July
- 0.68042 in august
In September, the high was higher at 0.68567 while the October low was close to the July low at 0.6880 (October 6). Ironically, this low came the day the RBNZ raised rates from 0.25% to 0.50%.
The next RBNZ meeting (and the first since the rate hike in October) is tomorrow night (in the US – Wednesday morning in New Zealand). Expectations are for another rate hike. Despite these expectations, the NZDUSD is weaker as the demand for the USD (on rate hike expectations) exceeds the demand for the NZD (which is already on a tightening bias). HMMMM.
Technically, the bias is certainly not in favor of buyers. On the daily chart:
- The price is lower than the 200 and 100 day MAs at 0.7087 and 0.70225
- The price traded at a new low of the month today.
Looking at the hourly chart below, the most recent highs from yesterday and today stopped at the 100 hour MA (and 100 day MA on Friday – see blue line (s) in the graphic below). Additionally, the price has not traded above the 200 hour MA since November 9.
As long as these bearish techniques persist, sellers remain in control despite the expected RBNZ rate hike.
What would change that?
The closest bullish tilt would technically be to break above the 100 hour MA at 0.7007 currently. This MA is also falling.
Go above this level and traders will start to focus on the 200 hour MA down to 0.7024 and the 100 day MA to 0.70225.
If after the RBNZ buyers come back and push higher, those would be the upside targets to hit and break through. Without it, and buyers are no winners.
If the price continues to move lower (as it did on October 6) for the giggles, look at the 0.6880 area (October 6 low and July low) as a key support target. Would buyers surely show up there? (with stops below).
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