FxPro: NZD lost 1.5% due to RBNZ shift towards softening

The news that the next step for the RBNZ is likely to be a rate cut, dropped NZDUSD by 1.5% to 0.6800. In comments to the monetary policyб Central Bank noted the weakening of forecasts for global growth (including Australia, Europe and China) and a decrease in the impulse of domestic spending. In addition, core inflation remains below the target of 2%, which also underpins the need for a stimulating monetary policy.

The Reserve Bank of New Zealand joined the long list of central banks, which rather quickly, by the standards of regulators, changed the tone from the crackdown to the readiness to soften policy. Despite the fact that earlier this year we saw a similar change from the Fed, the ECB, the RBA and many smaller regulators, the tone change from the RBNZ caused a sharp currency decline against the dollar to 3-week lows.

As for technical analysis, the NZDUSD pair has remained in a trend for growth since October last year, but already twice in March it touched the uptrend support line. In addition, it is worth paying attention to the important resistance for the pair slightly above 0.6900, as sales have increased around this level since the middle of last year. A fall below 0.6780 can be a signal of a possible break of the uptrend, and a dip below 0.6750 (previous local minimums) will confirm a reversal, opening the way to 0.6650 or even lower, to 0.6420.

In turn, the next reversal to growth from current levels will again raise the question of resistance at 0.6900. Exceeding this level opens the way for the pair towards 0.7000 or further to 0.7340.

Alexander Kuptsikevich, the FxPro analyst