The Reserve Bank of New Zealand raised rates by 50 basis points as expected earlier today to 2.5% (see post here).
The move was priced in and the price for the NZDUSD initially moved lower. Although there was a subsequent rise in the London morning session, with the price rise taking the price above the 100 hour MA (blue line). That break failed and backed off. After the US CPI, the price fell to a new cycle low reaching to 0.6080 in the process.
Since then, however, the stocks have seen a rebound especially the NASDAQ, and the dollar has seen some softening. The US yield curve has flattened with the 2-10 year yield moving to -18 basis points and a new cycle low for that spread. That has helped to weaken the USD a bit.
For the NZDUSD, it erased all its declines, moved above its closing level from yesterday and the swing low from last week at 0.61236. Momentum took the price back above its 100 hour moving average for the 2nd time today at 0.61463 and even cracked above the falling 200 hour moving average at 0.61646 briefly.
However there has been a rotation back to the downside few minutes that has taken the price back between the 100 hour moving average below at 0.61463 and the 200 hour moving average above at 0.61646. The current price trades at 0.6155.
Traders are a bit reluctant to push higher, but technically if the price can hold the 100 hour moving average, there remains hope for a rotation back to the upside.
On the topside the next target comes in at 0.61909 to 0.61965 followed by the 38.2% retracement of the move down from the June 16 high at 0.62003. On Friday of last week, the price stalled near that level as well increasing its importance going forward.
A move back below the 100 hour moving average would disappoint the buyers and keep the sellers firmly in control.
So for now, the price is in a neutral area. The sellers had the shot with the new cycle low. The buyers are taking their shot with the move back above the 100 hour moving average and 200 hour moving average as a technical catalyst. However if the buyers are to take more control, they have to push above the 200 hour moving average and stay above that level.
Absent that and at best, the NZDUSD is neutral from a technical perspective, with the sellers still feeling more confident.
