RBNZ rate rise expected on Wednesday
The NZDUSD is trading to the lowest level since mid-November today. The low price reached 0.69454. If you go back to March the low came in at 0.6941.
Other swing lows since then came in at:
- 0.6911 in June
- 0.6880 in July
- 0.68042 in August
In September, the high was higher at 0.68567 while the October low was near the low from July at 0.6880 (on October 6th). Ironically, that low happened on the day the RBNZ raised rates from 0.25% to 0.50%.
The next RBNZ meeting (and first since the rate rise in October) is tomorrow night (in US - Wednesday morning in New Zealand). The expectations are for another rates rise. Despite that expectations, the NZDUSD is lower as demand for USD (on rate rise expectations) outstrips the demand for the NZD (who are already on a tightening bias). HMMMM.
Technically, the bias is certainly not in favor of the buyers. On the daily chart:
- The price is below the 200 day and 100 day MAs at 0.7087 and 0.70225
- The price traded to a new month low today.
Looking at the hourly chart below, the most recent swing highs yesterday and today stalled at the 100 hour MA (and 100 day MA on Friday -see blue line(s) in the chart below). Also, the price has not traded above the 200 hour MA since November 9th.
As long as those bearish technical persist, the sellers are in control despite the RBNZ expected rate rise.
What would turn it around?
The closest bullish tilt technically would be to get above the 100 hour MA at 0.7007 currently. That MA is moving lower as well.
Get above that level, and traders will start to focus on the falling 200 hour MA at 0.7024 and the 100 day MA at 0.70225.
If after the RBNZ, the buyers return and push higher, those would be the upside targets to get to and through. Absent that, and the buyers are not winning.
If the price instead continues to go lower (like it did on October 6) for giggles watch the 0.6880 area (low from October 6 an low from July) as a key support target . Surely buyers would show up there? (with stops below).