NZD/USD and NZD/JPY after the RBNZ Satement

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NZD/USD and NZD/JPY after the RBNZ Satement

The Reserve Bank of New Zealand held its official cash rate at 3.50%. While it assured that there will be more rate hikes to come, it explained it needs a period of time to observe the economy after the 100-basis-points increase we have seen in 2014. Bank governor Graeme Wheeler did say that the Kiwi was too high, and that he expects the exchange rate to fall along with commodity prices. Let’s take a look at the NZD/USD and NZD/JPY charts.

NZD/USD has been bearish before the RBNZ statement, and remains so, but is very tentative. Oversold conditions and shaky price action suggests a possible consolidation or bullish correction ahead. However, we should limit any bullish outlook to the very short-term, as there is still downside risk towards the low on the year. NZD/JPY retreated after the RBNZ statement, but remaisn in a bullish channel. A break below this channel seen in the 4H chart would be a break below a flag pattern seen in the daily chart, which would give us a bearish continuation signal.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.