The Reserve Bank of New Zealand (RBNZ) kept the interest rate unchanged at 5.5% on Wednesday.
The decision to maintain the interest rate was anticipated. However, market participants noted a shift in the tone of the RBNZ’s official statements. In May, the bank indicated that the tight policy would continue as long as necessary, but now it is open to easing the restrictive monetary policy if inflation slows down.
As a result, market participants are now considering the possibility of a nearer-term rate cut, which led to a decline in the New Zealand dollar relative to other currencies.
Specifically, against the US dollar, the “kiwi” fell by approximately 0.75%.
Will the decline continue as the situation develops?
According to the technical analysis of the NZD/USD chart today:
→ In 2024, the exchange rate dynamics are significantly influenced by interactions with the levels: 0.62150 (resistance), 0.58850 (support), and 0.60500 (which acts as a pivot between support and resistance, as indicated by the black arrows).
→ Bullish sentiment prevailed in the market since May, resulting in the formation of an upward blue channel on the chart. However, the bulls were unable to break through the 0.62150 resistance, and now the median of the blue channel serves as resistance (indicated by the blue arrow).
Considering the prospect of further NZD/USD price decline, it is important to note obstacles in the path of the bears in the form of supports: → from the lower boundary of the blue channel; → from the 0.60500 level, around which the price has fluctuated since the beginning of the year; → from the psychological level of 0.6.
Therefore, technically, it is possible that the downward momentum created today due to the RBNZ decision may weaken when attempting to break through these supports.
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