The NZD/USD pair has recently hit a seven-week low at 0.6091 due to ongoing sell-off pressure. This decline is mainly linked to the Reserve Bank of New Zealand’s (RBNZ) decision to lower interest rates in response to decreasing inflation levels.
The RBNZ has been implementing consecutive rate cuts, with the most recent cut being 50 basis points, bringing the key rate down to 4.75% per annum. This move is aimed at keeping inflation within the target range of 1-3%, with expectations of upcoming consumer price data showing inflation stabilizing around 2%, in line with the RBNZ’s goals.
Internationally, all eyes are on the upcoming release of the latest US Federal Reserve meeting minutes. These minutes are closely watched as they offer important insights into the Fed’s future monetary policy direction. Investors often use this information to assess the likelihood of further Fed-rate adjustments, impacting currency movements worldwide.
In terms of technical analysis for NZD/USD, the market has met the projected target of the downward wave at 0.6080. A new consolidation phase is expected to form above this level, with a potential corrective movement towards 0.6230 if there is an upward breakout. However, a further decline to 0.5944 could be on the cards if the consolidation resolves downwards. The MACD indicator also supports a bearish outlook, with the signal line below zero and trending downwards.
Looking at the hourly chart, after consolidating around 0.6126, the pair reached the downward target at 0.6080 with a downward exit. An upward movement to 0.6126 is expected, followed by a retest of 0.6100, potentially leading to a new consolidation range at these levels. An upward breakout could trigger a corrective rally towards 0.6230, seen as a response to the recent downward trend. The Stochastic oscillator indicates a potential for upward correction, with the signal line below 20 and pointing upwards.
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