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Market Over-Reacts? NZD tanks more than 2% The New Zealand dollar experienced a significant drop of over 2% on Wednesday, reaching its lowest level in more than three months at $0.6039. This decline followed the Reserve Bank of New Zealand's (RBNZ) expected decision to raise cash rates by 25 basis points to 5.5%. However, the central bank also hinted that it might conclude its tightening campaign, which likely contributed to the currency's decline. In more positive news, inflation expectations eased during the first quarter, dropping from 3.30% to 2.79%, potentially solidifying the RBNZ's choice to halt further rate hikes. Analyzing the 1-hour chart of the NZD/USD pair, it is evident that it broke below the previous swing low at 0.6111. However, the selling momentum may have started to weaken in the past hour, as indicated by the extreme oversold condition of the Relative Strength Index (RSI) and the pair's inability to close below 0.6100. The next target for a downward movement could be 0.6092, which seems to be the level where current sellers feel comfortable probing further. One potential explanation for this slowdown could be the release of the latest Federal Open Market Committee (FOMC) minutes. The minutes revealed a division among Federal Reserve officials during their previous meeting regarding the future direction of interest rates. Some members believed that further rate increases were necessary, while others anticipated a slowdown in economic growth that would negate the need for additional tightening measures. As a result, the committee decided to remove the phrase "additional policy firming may be appropriate" from its post-meeting statement. Market expectations currently indicate that the rate increase in May will be the final one in the current cycle. Furthermore, there is speculation that the Federal Reserve may reduce rates by approximately a quarter percentage point before the year's end. If this prediction holds true, it could be argued that the sharp decline in the New Zealand dollar is an overreaction.
by BlackBull_Markets
NZD/USD to remain bid ahead of tomorrow's RBNZ meeting?There are a growing number of calls for the RBNZ to deliver a hawkish 25bp hike tomorrow, due to the government's 'inflationary' budget delivered last week. This could also potentially result in the RBNZ upgrading their terminal rate in their quarterly forecasts. NZDUSD is consolidating on the 4-hour chart, having found support above the 200-day EMA. RSI (14) is above 50 and confirming the initial stages of this assumed trend, and OBV (on balance volume) has broken to new cycle highs to suggest underlying bullish pressure. We've identified around the monthly R1 pivot ~0.6340 for an initial upside target, and the near-term bias remains bullish above the 200-day EMA.
Long
by CityIndex
20 Reason For sell NZDUSD🔆MULTI-TIME FRAME TOP-DOWN ANALYSIS OVERVIEW☀️ 1:✨Eagle eye: after forming a church in 2007, the price is currently in sideways to upside phase yet grab all bearish liquidity and now ready for a bull move in my point of view based on the 12-month chart 2:📆Monthly: clear downtrend here, but the last low is not all its lower high, so the downtrend is halted here in this tf price is officially sideways 3:📅Weekly: price breach recent OB also breach recent pullback, so probability it may go up to premium area or extreme OB so we can open only buy positions in this pair in coming weeks 😇 7-Dimension Analysis 🟢 Analysis Time Frame: Daily 1 Price Structure: The price structure is showing a change in character and starting a new impulsive move. 2 Pattern Candle Chart: A bearish momentum candle known as the Boji classic pattern has appeared. 3 Volume: There is not much support from the volume. 4 Momentum (Unconventional RSI): The RSI has encountered resistance at the 60 level. 5 Volatility Measure (Bollinger Bands): The Bollinger Bands have shown a head fake with a bearish momentum candle. 6 Strength (ADX): The bearish DMi has gained strength. 7 Sentiment (ROC): There has been a sharp change in the sentiment over the last week. ✔️ Entry Time Frame: H4 Entry Time Frame Structure: Bearish. Entry Move: Impulsive. Support/Resistance Base: Waiting for H4 trend line. FIB: Trigger trend line has also been breached. ☑️ Final Comments: Sell at the breakout. 💡 Decision: Sell. 🚀 Entry: 0.6223. ✋ Stop Loss: 0.6277. 🎯 Take Profit: 0.6102. 😊 Risk to Reward Ratio: 1:3. 🕛 Expected Duration: 3 day
Short
by Optimum369