As we get ready for the 12/11 session, the RBNZ has revealed its latest monetary policy decision, which is to hold the official cash rate at 3.50%. It remains in the “assessment period”. The market is expecting the next rate hike to be in the second half of 2015.
Official RBNZ Statement
Reaction to the RBNZ Statement: The statement was was mixed, but there does seem to be some optimism in terms of growth and inflation forecast. The market reacted with sharp NZD-buying. The NZD/USD for example rallied sharply from 0.7675 to 0.7825 in the hour of the release.
Resistance: As the NZD/USD rallies, it will be testing a speedline coming down from a November’s high at 0.7973. This might give some near-term resistance, and if there is a reaction, we should monitor the bearish attempt.
If the market holds above the 0.7725-0.7750 area, the bullish correction outlook is still in play. There is still upside risk towards the 0.79 level, given a neutral to bearish USD. If the USD strengthens this week, today’s RBNZ statement is not likely to have enough impact in turning the NZD/USD bullish. It will need the help of the USD paring its recent gains.
The thing is, if price does break above 0.79, then we can say that NZD/USD is shifting from a bearish to neutral mode.
Levels and Outlook:
The daily chart shows that if price breaks above 0.79, it might also break above a falling trendline from a resistance in October at 0.8033. Now, in a consolidation mode, NZD/USD has upside risk limited to 0.80-0.8033 area, and the downside risk limited to the 0.7650-0.77 area, just above the actual low on the year at 0.7608.
If will take a break above 0.81 to start the consideration for a bullish market, or at least a bullish correction towards the 0.83-0.84 area, which is where the 200-day SMA as well as the 61.8% retracement (0.8367) reside.
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