GBPNZD has been trending lower on its 4-hour time frame, moving below a descending trend line connecting the latest highs of price action. Using the Fib tool on the latest swing high and low shows that the 50% retracement level lines up with the trend line at the 1.9200 major psychological mark.
Stochastic is already indicating overbought conditions with a bit of bearish divergence, confirming that sellers are ready to take control. Similarly RSI seems to be turning lower so GBPNZD could follow suit. In that case, price could resume its selloff to the previous lows at 1.7720.
The 100 SMA is below the 200 SMA, also confirming that the downtrend could continue. The 200 SMA coincides with the descending trend line, adding to its strength as a potential price ceiling. However, a break past the 61.8% Fib at 1.9500-1.9600 could signal that a reversal is in order.
Last week, the RBNZ announced that it would provide an update on the economy on Thursday this week, spurring speculations that they are shifting to a dovish stance. Over the weekend, quarterly CPI data missed expectations of a 0.5% gain and came in at 0.4%. Earlier in the week, the RBNZ shared its plans to tighten lending requirements in the housing market to curb property prices.
These led market watchers to predict that the RBNZ might be gearing up to cut interest rates in their next statement or at least keep their policy options open should they need to ease. However, traders are also expecting additional stimulus from the Bank of England even though majority of policymakers voted to keep rates on hold last week.
UK data releases this week should provide volatility for this pair, with the CPI up for release today. Tomorrow has the jobs report due while Thursday has the retail sales report on tap.