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RBNZ Decisions Temporarily Supported NZDUSD

8/17/2022 1:29 PM

This week, the NZD/USD pair corrected down to 0.6315 on the back of poor Chinese data on industrial production and retail sales, which increases the risks of a global economic downturn.

Today the price attempted to grow after the decision of the Reserve Bank of New Zealand (RBNZ) to raise the interest rate by 50.0 basis points from 2.50% to 3.00%. The accompanying statement indicated that the regulator still sees the value in tightening monetary policy to maintain price stability and promote the most sustainable employment. The head of the department, Adrian Orr, noted that although economic growth in the country is slowing down, a recession is not expected.

Amid this news, the NZD/USD pair rose to 0.6380 but soon returned to its original position, as the market is waiting for another important event of the week – the publication of the minutes of the last meeting of the US Federal Reserve, so investors remain cautious and are in no hurry to open new trades. The document may contain an explanation of the reasons for the recent actions of the regulator, as well as hints at the next steps of the financial authorities: it is not known whether the agency will maintain the previous pace of rate increases (by 75.0 basis points) or slow it down to 50.0 basis points, but the “hawkish” rhetoric in the matter of changing the parameters of monetary policy can cause a significant movement in the price of an asset.

The trading instrument is moving within a wide downward channel. To resume a serious decline, the price needs to break below 0.6286 (Murrey [3/8], Fibonacci retracement 61.8%, the middle line of Bollinger bands), and then its targets will be 0.6164 (Murrey [1/8]), 0.6100 (Murrey [0/8]). The key “bullish” is 0.6408 (Murrey [5/8]), the breakout of which will give the prospect of continued growth to 0.6490 (Fibonacci correction 50.0%), 0.6590 (Murrey [8/8]).

Technical indicators do not give a single signal: Bollinger bands are directed upwards, Stochastic reverses downwards, and the MACD histogram decreases in the positive zone.

Resistance levels: 0.6408, 0.6490, 0.6590. | Support levels: 0.6286, 0.6164, 0.6100.

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