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NZD/USD Price Analysis: Sharply falls to 0.6100 as focus turns to RBNZ policy decision

  • NZD/USD drops to 0.6100 ahead of RBNZ policy decision.
  • US Dollar stabilizes as investors focus on FOMC Minutes.
  • US yields rise as the Fed maintains a hawkish stance on the outlook for interest rates.

The NZD/USD pair faces selling pressure and falls to the support of the 0.6100 round level in the American session on Monday. NZD/USD is pressured by the weakening New Zealand Dollar ahead of the Reserve Bank of New Zealand's (RBNZ) interest rate decision, which will be announced on Wednesday.

Investors expect the RBNZ to keep its official interest rate at 5.5%. Therefore, market participants will focus on clues as to when the RBNZ will start cutting interest rates. Financial markets currently believe that the RBNZ will move to a normalization policy next year.

Meanwhile, the US Dollar Index (DXY) rises to 104.60 as investors remain slightly cautious ahead of the Federal Open Market Committee (FOMC) May Meeting Minutes, due to be released on Wednesday. The FOMC Minutes will indicate policymakers' views on the outlook for interest rates.

US 10-year Treasury yield rises to 4.44% as Fed policymakers insist on keeping interest rates higher for longer, despite expected decline in Index data of Consumer Prices (CPI) for April. The annual headline CPI and core CPI fell to 3.4% and 3.6%, respectively.

The NZD/USD pair extends its recovery to the 50% Fibonacci retracement (traced from the December 26 high at 0.6410 to the April 19 low around 0.5850) at 0.6130 on the daily time frame. The short-term outlook for the New Zealand asset has improved as the 20-day and 50-day exponential moving averages (EMA) sit around 0.6017. The 14-period RSI has moved comfortably towards the bullish range of 60.00-80.00, suggesting that momentum has tilted to the upside.

A bullish move above the February 9 high at 0.6160 will push the asset towards a 61.8% retracement at 0.6200, followed by the January 15 high near 0.6250

On the contrary, further declines would occur if the asset broke below the April 4 high around 0.6050. This would drag the pair towards the psychological support of 0.6000 and the April 25 high at 0.5969.

NZD/USD daily chart

PRICE OF THE NEW ZEALAND DOLLAR STILL

The following table shows the percentage evolution of the New Zealand Dollar (NZD) against the main currencies quoted today. The New Zealand Dollar was the strongest currency against the Australian Dollar.

USD EUR GBP JPY CAD AUD NZD CHF
USD 0.03% -0.02% 0.28% -0.03% 0.24% 0.33% -0.06%
EUR -0.03% -0.09% 0.29% -0.06% 0.25% 0.31% -0.08%
GBP 0.02% 0.09% 0.24% 0.03% 0.33% 0.38% -0.01%
JPY -0.28% -0.29% -0.24% -0.34% -0.03% 0.06% -0.33%
CAD 0.03% 0.06% -0.03% 0.34% 0.23% 0.36% -0.02%
AUD -0.24% -0.25% -0.33% 0.03% -0.23% 0.04% -0.33%
NZD -0.33% -0.31% -0.38% -0.06% -0.36% -0.04% -0.39%
CHF 0.06% 0.08% 0.00% 0.33% 0.02% 0.33% 0.39%

The heat map shows the percentage changes of the major currencies against each other. The base currency is chosen in the left column, while the quote currency is chosen in the top row. For example, if you choose the New Zealand Dollar in the left column and scroll down the horizontal line to the US Dollar, the percentage change in the box will represent NZD (base)/USD (quote).

Source: Fx Street

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