NZD/USD Rejects Downside Support On RBNZ Statements

The RBNZ made news last night with their Interest Rate Decision and commentary. To recap my colleague Rowan’s coverage from earlier, the RBNZ held rates steady at 1.75%. Citing jobs growth, stagnant wages, and a positive outlook for exports, the RBNZ stated monetary policy will remain “accommodative for a considerable period.”

All in all, the tone was fairly dovish. The NZD/USD reacted accordingly, putting in a hard test of the .6900 level. Since then, a nice rebound has taken price to the .6950 handle.

NZD/USD Technicals

In an update from Wednesday, I outlined a trading plan from a key macro Fibonacci support level. The trade proved to be a success, cashing in for 36 pips on a rejection of the .6900 price point.

The initial bearish pressure brought on by the RBNZ statements was considerable. Price consolidated near the .6924 level before eventually testing .6901. A lower-than-expected U.S. CPI number gave this market a boost around 8:30 AM EST.

Here are the three levels to watch for the remainder of the week:

• Resistance(1): Psyche Level, .7000
• Support(1): Macro 78% Retracement, .6924
• Support(2): Psyche Level, .6901

Overview: Today’s close will be important to the intermediate-term outlook for the Kiwi. If .6901 holds as the session low, a long position trade going into the weekend may be in the offing. Stay tuned to FX Leaders for details on how to play the Kiwi as we roll toward Friday’s close.